<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
/x/ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended March 31, 2000
OR
/ / TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934.
For the transition period from to .
-------------- --------------
COMMISSION FILE NUMBER: 0-29050
TOMORROW'S MORNING, INC.
(Exact name of small business issuer as specified in its charter)
CALIFORNIA 95-4379805
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
269 South Beverly Drive, Beverly Hills, California 90212
(Address of principal executive offices)
Issuer's telephone number: (310) 440-2778
Check whether the Registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the Registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
----- -----
Number of shares of common stock outstanding at April 28, 2000: 5,085,372
Transitional Small Business Disclosure Format (CHECK ONE): Yes No X
----- ------
1
<PAGE>
PART I
FINANCIAL INFORMATION
TOMORROW'S MORNING, INC.
(A Development Stage Enterprise)
Balance Sheet
March 31, 2000
(Unaudited)
<TABLE>
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 279
Software development costs 95,867
Prepaid expenses and other current assets 8,175
Loan receivable - officer/shareholder 10,697
- ------------------------------------------------------------------------------------------------------------------
Total current assets $ 115,018
OTHER ASSETS:
Fixed assets, net of accumulated depreciation of $84,325 58,373
- ------------------------------------------------------------------------------------------------------------------
Total other assets 58,373
- ------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS 173,391
==================================================================================================================
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 1,979,253
Current maturities of contracts payable 12,840
Loans payable 592,420
- ------------------------------------------------------------------------------------------------------------------
Total current liabilities $ 2,584,513
Contract payable, net of current maturities 4,184
- ------------------------------------------------------------------------------------------------------------------
Total liabilities 2,588,697
SHAREHOLDERS' DEFICIT:
Preferred Stock; no par value, 1,000,000 shares authorized, no shares issued and
outstanding
Common stock; no par value, 10,000,000 shares
authorized, 5,085,372 shares issued and outstanding 13,043,486
Deficit accumulated during development stage (15,458,792)
- ------------------------------------------------------------------------------------------------------------------
Total shareholders' deficit (2,415,306)
- ------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT $ 173,391
==================================================================================================================
</TABLE>
2
<PAGE>
TOMORROW'S MORNING, INC.
(A Development Stage Enterprise)
Statements of Operations
<TABLE>
<CAPTION>
From inception
on
Nine months Nine months Three months Three months June 30, 1992
ended ended ended ended to
March 31, 2000 March 31, 1999 March 31, 2000 March 31, 1999 March 31, 2000
- -----------------------------------------------------------------------------------------------------------------------------
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C> <C>
Revenue:
Subscriptions $ -- $ 3,144 $ -- $ -- $ 552,845
Editorial, Production and
Distribution Cost
-- 906 -- -- 3,313,352
- -----------------------------------------------------------------------------------------------------------------------------
Gross Margin
-- 2,238 -- -- (2,760,507)
Operating expenses
422,422 393,706 171,678 95,235 9,331,301
Research and development
-- 2,000 -- -- 840,376
- -----------------------------------------------------------------------------------------------------------------------------
Loss from operations (422,422) (393,468) (171,678) (95,235) (12,932,184)
Noncash Option Compensation and
Consulting Fees -- -- -- -- (2,026,204)
Legal settlement -- -- -- -- (30,000)
Other expenses, net (19,575) (20,838) (6,525) (6,946) (91,366)
Interest expense (59,062) (51,470) (19,686) (19,690) (443,700)
Interest income 630 2,601 151 1,547 69,462
- -----------------------------------------------------------------------------------------------------------------------------
Loss before income taxes $ (500,429) $ (463,176) $ (197,738) $ (120,324) $(15,453,992)
Income taxes $ -- $ -- $ -- $ -- $ 4,800
- -----------------------------------------------------------------------------------------------------------------------------
Net loss $ (500,429) $ (463,176) $ (197,738) $ (120,324) $(15,458,792)
=============================================================================================================================
Net loss per share
basic and diluted $ (0.13) $ (0.14) $ (0.05) $ (0.04)
=============================================================================================================================
Weighted Average Shares
Outstanding, basic and diluted 3,798,488 3,274,533 4,179,220 3,274,533
=============================================================================================================================
</TABLE>
3
<PAGE>
TOMORROW'S MORNING, INC.
(A Development Stage Enterprise)
Statements of Cash Flows
<TABLE>
<CAPTION>
Nine months ended Nine months ended Three months ended
March 31, 2000 March 31, 1999 March 31, 2000
------------------------------------------------------------------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C>
CASH FLOWS PROVIDED BY (USED FOR) OPERATING ACTIVITIES:
Net loss $ (500,429) $ (463,176) $ (197,738)
ADJUSTMENTS TO RECONCILE NET LOSS TO NET
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES
Depreciation 19,575 20,838 6,525
Amortization of debt issuance costs - - -
Amortization of loans payable discount 9,370 21,356 3,122
Non-cash litigation settlement 2,000 - 2,000
Non-cash compensation 50,000 5,000 50,000
Non-cash payment for services rendered 1,719 - 1,719
CHANGES IN OPERATING ASSETS AND LIABILITIES:
(Increase) Decrease in Assets:
Accounts receivable - 444 -
Prepaid expenses 848 42,587 848
Software development costs - - -
Deposits 32,772 - 32,772
Increase (Decrease) in Liabilities:
Accounts payable and accrued expenses 229,932 177,289 11,905
Deferred revenue - - -
- -----------------------------------------------------------------------------------------------------------------------------------
Net cash used by operating activities (154,213) (195,662) (88,847)
- -----------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS USED FOR INVESTING ACTIVITIES:
- -----------------------------------------------------------------------------------------------------------------------------------
Acquisition of fixed assets - - -
- -----------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS PROVIDED BY (USED FOR) FINANCING ACTIVITIES
Proceeds from issuance of common stock 70,000 - 50,000
Proceeds from revolving line of credit - - -
Proceeds from loans payable and warrants - 105,000 -
Proceeds from notes payable 30,000 - -
Proceeds from contracts payable - - -
Cash paid for debt issuance costs - - -
Proceeds from loans payable, officer-shareholder - - -
Proceeds from exercise of stock options - 2,100 -
Proceeds from exercise of warrants 50,000 - 50,000
Proceeds from shareholders - 11,619 -
Repayment of line of credit - - -
Repayment of loans payable - - (18,689)
Repayment of notes payable - - -
Repayment of contracts payable - (2,241) -
Repayment from shareholder, net of unpaid interest 15,176 32,639 -
Loans to shareholders (10,697) - (10,697)
Cash paid for offering costs - -
Purchase of treasury stock - -
- -----------------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 154,479 149,117 70,614
- -----------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and equivalents 266 (46,545) (18,233)
Cash and equivalents, beginning of period 13 46,154 18,512
- -----------------------------------------------------------------------------------------------------------------------------------
Cash and equivalents, end of period $ 279 $ (391) $ 279
===================================================================================================================================
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES:
Decrease in debt issuance costs recorded in
connection with the issuance of convertible notes payable $ - $ - $ -
===================================================================================================================================
Conversion of notes payable to common stock $ - $ - $ -
===================================================================================================================================
Non-cash compensation $ 50,000 $ 5,000 $ 50,000
===================================================================================================================================
Issuance of warrants connected to debt conversion $ - $ - $ -
===================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
From inception on
Three months ended June 30, 1992 to
March 31, 1999 March 31, 2000
------------------------------------------------
(unaudited) (unaudited)
<S> <C> <C>
CASH FLOWS PROVIDED BY (USED FOR) OPERATING ACTIVITIES:
Net loss $ (120,324) $ (15,458,792)
ADJUSTMENTS TO RECONCILE NET LOSS TO NET
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES
Depreciation 6,946 84,326
Amortization of debt issuance costs - 138,168
Amortization of loans payable discount 6,252 34,371
Non-cash litigation settlement - 32,000
Non-cash compensation 5,000 4,693,481
Non-cash payment for services rendered - 134,219
CHANGES IN OPERATING ASSETS AND LIABILITIES:
(Increase) Decrease in Assets:
Accounts receivable - 445
Prepaid expenses - 42,988
Software development costs - (124,110)
Deposits - 9,405
Increase (Decrease) in Liabilities:
Accounts payable and accrued expenses 66,245 491,159
Deferred revenue - 1,459,236
- ---------------------------------------------------------------------------------------------------------------------
Net cash used by operating activities (35,881) (8,463,104)
- ---------------------------------------------------------------------------------------------------------------------
CASH FLOWS USED FOR INVESTING ACTIVITIES:
- ---------------------------------------------------------------------------------------------------------------------
Acquisition of fixed assets - (142,697)
- ---------------------------------------------------------------------------------------------------------------------
CASH FLOWS PROVIDED BY (USED FOR) FINANCING ACTIVITIES
Proceeds from issuance of common stock - 6,819,734
Proceeds from revolving line of credit - 50,000
Proceeds from loans payable and warrants 5,000 939,276
Proceeds from notes payable - 1,705,086
Proceeds from contracts payable - 127,401
Cash paid for debt issuance costs - (210,757)
Proceeds from loans payable, officer-shareholder - 18,689
Proceeds from exercise of stock options - 84,638
Proceeds from exercise of warrants - 51,074
Proceeds from shareholders 173 11,619
Repayment of line of credit - (50,000)
Repayment of loans payable - (442,089)
Repayment of notes payable - (11,456)
Repayment of contracts payable (392) (110,377)
Repayment from shareholder, net of unpaid interest 26,652 85,746
Loans to shareholders - (107,976)
Cash paid for offering costs - (304,528)
Purchase of treasury stock - (50,000)
- ---------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 31,433 8,606,080
- ---------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and equivalents (4,447) 279
Cash and equivalents, beginning of period 4,056 -
- ---------------------------------------------------------------------------------------------------------------------
Cash and equivalents, end of period $ (391) $ 279
=====================================================================================================================
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES:
Decrease in debt issuance costs recorded in
connection with the issuance of convertible notes payable $ -
================================================================================================
Conversion of notes payable to common stock $ -
================================================================================================
Non-cash compensation $ 5,000
================================================================================================
Issuance of warrants connected to debt conversion $ -
================================================================================================
</TABLE>
4
<PAGE>
TOMORROW'S MORNING, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
NINE MONTHS ENDED MARCH 31, 2000
(1) SUMMARY SIGNIFICANT ACCOUNTING POLICIES:
INTERIM FINANCIAL STATEMENTS:
The accompanying financial statements include all adjustments
(consisting of only normal recurring accruals), which are, in the
opinion of management, necessary for a fair presentation of the
results of operations for the periods presented. Interim results are
not necessarily indicative of the results to be expected for a full
year. The financial statements should be read in conjunction with the
financial statements included in the annual report of Tomorrow's
Morning, Inc. (the "Company") on Form 10-KSB for the year ended June
30, 1999.
NATURE OF BUSINESS:
The Company was incorporated in June 1992 in the State of California
and is engaged in the publication of a children's weekly newspaper. As
of March 31, 2000, the Company is a development stage enterprise, as
defined in Financial Accounting Standards Board Statement No. 7. The
Company is devoting substantially all of its efforts toward
establishing new business and product.
In June 1996 the Company filed for an initial public offering ("IPO")
of its common stock on Form SB-2 with the Securities and Exchange
Commission. That offering was successfully completed in March 1997.
BASIS OF PRESENTATION:
For the nine months ended March 31, 2000, the Company had negative
cash flows from operations of $154,213 and incurred a net loss of
$500,429. The Company's expenses continue to greatly exceed its
income, and its future depends on: (i) finding a strategic partner;
(ii) the development of complementary products; (iii) completion and
successful marketing of the SCOOP-TM- CD-ROM journalism game; (iv) the
formation of joint-marketing alliances for corporate sponsorship of
schools through the Company's Reading Partners Program and/or the sale
of advertising space; (v) getting one or more television shows, or
interstitial news "flashes", on the air; and (vi) expansion into
ancillary publishing and merchandising through redirecting the
Company's content and/or licensing the Company's characters and
identity. The Company has used all of the net proceeds of its initial
public offering and finds that it requires substantial additional
funds in order to reach the above long-term goals. In addition, as
discussed below in "Management's Discussion and Analysis of Financial
Condition and Results of Operations Liquidity and Capital Resources,"
the Company requires an immediate infusion of working capital to
continue its present operations. There can, however, be no guarantee
that the Company will be able to obtain such additional long- and
short-term funds or that, if obtained, it will be able to achieve or
sustain significant revenues or profitability in the future.
5
<PAGE>
TOMORROW'S MORNING, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED MARCH 31, 2000
(1) SUMMARY SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
REVENUE RECOGNITION:
Subscription sales are recorded as deferred revenue at the time of sale.
Revenues from subscriptions are recognized ratably over the subscription
period as newspapers are delivered. Deferred revenue represents unfulfilled
subscription sales at period-end.
(2) NON-CASH TRANSACTIONS:
During December 1999 the Company entered into a stipulated judgment to
settle a lawsuit brought by its landlord for past due rent. The stipulated
judgment provided for payment of $125,000 in cash and 20,000 shares of the
Company's common stock. The common shares were issued on January 13, 2000.
On January 13, 2000, in return for services rendered and liability on a
personal guarantee of a Company obligation, the Company issued to Adam
Linter (i) 500,000 shares of Common Stock and (ii) warrants to purchase
another 500,000 shares for $0.10 per share until January 14, 2005.
On February 8, 2000, the Company issued 5,000 shares of Common Stock to
Steven Raft for accounting services.
On February 22, 2000, the Company issued 700,000 shares of Common Stock to
Peter Rettman, 500,000 of which were issued for $50,000 in cash pursuant to
his exercise of previously granted warrants, and the balance of which were
issued for an additional payment of $50,000 in cash.
(3) LEGAL PROCEEDINGS:
On August 17, 1998, the Company received a notice of levy from the Internal
Revenue Service as to $30,761 for back taxes. Upon receipt of the notice,
the Company contacted that agency and negotiated a payment plan. This
amount was subsequently paid.
On December 17, 1998, Starbright Graphics, Inc. filed an action against the
Company in the Superior Court of New Jersey Law Division, Middlesex County,
seeking $699,231, included in accounts payable, for services rendered in
connection with the printing and distribution of the newspaper. This action
was dismissed in New Jersey by stipulation without prejudice on March 23,
1999, and filed in Los Angeles County Superior Court for breach of contract
on July 13, 1999.
On March 10, 1999, Peter Li, Inc. filed an action against the Company in
Los Angeles County Superior Court seeking $33,711 in damages for breach of
contract in connection with services provided to the Company.
On May 14, 1999, the Company's landlord filed an action in Los Angeles
County Superior Court, West District, against the Company and Adam Linter
seeking $238,519 in connection with the Company's breach of its lease
payment obligations. In December 1999, this action was settled by a
stipulated judgment providing for payments of $125,000 in cash and 20,000
shares of the Company's common stock. $30,000 of this amount has
subsequently been paid in cash and the shares issued to the landlord.
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
THE FOLLOWING DISCUSSION CONTAINS TREND INFORMATION AND OTHER FORWARD-LOOKING
STATEMENTS WITHIN THE MEANING OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995 THAT INVOLVE A NUMBER OF RISKS AND
UNCERTAINTIES. THE ACTUAL RESULTS OF TOMORROW'S MORNING, INC. (THE "COMPANY")
COULD DIFFER MATERIALLY FROM THOSE DISCUSSED IN THE FORWARD-LOOKING STATEMENTS.
FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY INCLUDE, BUT ARE
NOT LIMITED TO, THOSE IDENTIFIED BELOW IN "OVERVIEW."
OVERVIEW: For the quarter ended March 31, 2000, the Company had no revenues and
experienced a net loss of $197,738, as compared to no revenues and a net loss of
$120,324 for the three months ended March 31, 1999. For the nine months ended
March 31, 2000, revenues were also zero and the Company incurred a net loss of
$500,429, as compared to revenues of $3,144 and a net loss of $463,176 for the
nine months ended March 31, 1999. The Company continues to sustain substantial
losses, which have resulted in suspension of publication of the Tomorrow's
Morning newspaper (the "Newspaper"), the Company's only product to date. As a
result, such losses threaten the Company's ability to continue as a going
concern. In the long run, the Company's future depends on: (i) finding a
strategic partner; (ii) the development of complementary products; (iii)
completion and successful marketing of the SCOOP-TM- journalism game; (iv) the
formation of joint-marketing alliances for corporate sponsorship of schools
through the Company's READING PARTNERS PROGRAM and/or the sale of advertising
space in the Newspaper should publication resume; (v) getting one or more
television shows, or interstitial news "flashes", on the air; and (vi) expansion
into ancillary publishing and merchandising through redirecting the Company's
content and/or licensing the Company's characters and identity. However, as
discussed below in "Liquidity and Capital Resources," because virtually
all-available cash has been exhausted due to continuing losses, the Company
requires an immediate infusion of working capital to remain in operation. There
can, however, be no guarantee that the Company will be able to obtain such
working capital.
RESULTS OF OPERATIONS:
THREE-MONTH PERIODS ENDED MARCH 31, 2000 AND 1999: Revenues for the quarter
ended March 31, 2000 were zero, the same as for the three months ended March 31,
1999. Costs and expenses increased to $178,203 during the three months ended
March 31, 2000, an approximately 87% change from $95,235 during the quarter
ended March 31, 1999 primarily due to increased legal fees in connection with
ongoing litigation and the preparation of filings with the Securities and
Exchange Commission.
Total interest expense for the quarter ended March 31, 2000 was $19,686, as
compared to $19,690 for the same three-month period in 1999. This reflects the
interest due on the Company's fixed obligations and has not changed from the
same period in the prior fiscal year.
For the three months ended March 31, 2000, the Company experienced a net loss of
$197,738, an increase of approximately 64% from the $120,324 net loss incurred
in the three months ended March 31, 1999. The change in net loss was primarily
due to the factors described above with respect to costs and operating expenses.
NINE-MONTH PERIODS ENDED MARCH 31, 2000 AND 1999: Revenues for the nine months
ended March 31, 2000 were zero, as compared to $3,144 for the nine months ended
March 31, 1999. Costs and expenses increased to $441,997 during the nine months
ended March 31, 2000; a change of 11% from $396,612 during the nine months ended
March 31, 1999.
Total interest expense for the nine months ended March 31, 2000 was $59,062, as
compared to $51,470 for the same nine-month period in 1999. This increase of
approximately 16% was attributable to increased borrowing to satisfy existing
fixed obligations.
For the nine months ended March 31, 2000, the Company experienced a net loss of
$500,429, an increase of approximately 8% from the $463,176 net loss incurred in
the nine months ended March 31, 1999. The change in net loss was primarily due
to the factors described above with respect to legal fees and interest expense,
partially offset by reduced costs in other areas.
7
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES: To date, the Company's primary capital needs
have been to fund the development and growth of the Newspaper and the research
and development of synergistic children's media products. Since inception, sales
of the Newspaper and certain custom-published Newspaper inserts have been
essentially the sole source of Company revenue. To the extent that sales of the
Newspaper were directed at schools (which were the source of most
subscriptions), such business was seasonal, with most sales taking place between
September and June. Seasonality was not believed to be a factor with non-school
sales.
As of March 31, 2000, the Company had current assets of approximately $115,000.
As a result of its lack of working capital, the Company is currently unable to
meet its financial obligations to its lenders and other creditors, including its
landlord and the vendor that has printed the Newspaper. In order to resume its
proposed business activities, the Company must immediately raise approximately
$500,000 to $1,000,000 through private debt or equity offerings. While the
Company continues to engage in discussions with prospective financing sources,
there can be no guarantee that such funding will be available on terms favorable
to the Company or its shareholders, if at all. Until such near-term funding is
obtained, all of the Company's operations will remain at minimal levels.
As to long-term funding requirements, the Company continues to pursue
opportunities for a private equity offering of up to $5 million. In addition,
the Company is also investigating other approaches to obtain long-term operating
funds while also maximizing shareholder value. To date, those approaches have
included a possible merger with the appropriate entity or a sale of the Company
or its assets. There can be no guarantee that any of the Company's long-term
funding efforts will be successful or, if successful, that they will result in a
transaction on terms favorable to the Company or its shareholders. If the
near-term funds described above are obtained, unless long-term funds also become
available, the Company may be required to curtail its future operations, which
would have a material adverse effect on the Company's business, operating
results and financial condition at that time.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS:
In March 1998, the American Institute of Certified Public Accountants ("AICPA")
issued Statement of Position No. 98-1, "Accounting for Costs of Computer
Software Developed or Obtained for Internal Use" which provides guidance on
accounting for the costs of computer software developed or obtained for internal
use. SOP 98-1 is effective for financial statements for fiscal years beginning
after December 15, 1998. The Company does not anticipate that the adoption of
this statement will have a material effect on its financial statements.
In April 1998, the AICPA issued SOP No. 98-5 "Reporting on the Costs of Start-Up
Activities." This standard requires companies to expense the costs of start-up
activities and organization costs as incurred. In general, SOP 98-5 is effective
for fiscal years beginning after December 15, 1998. The Company does not
anticipate that the adoption of this statement will have a material effect on
its financial statements.
In June 1998, the United States Financial Accounting Standards Board issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities,"
effective for fiscal years beginning after June 15, 1999. The Company
anticipates that due to its limited use of derivative instruments, the adoption
of SFAS No. 133 will not have a material effect on its financial statements.
8
<PAGE>
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
With respect to a previously reported action by Starbright Graphics, Inc., on
April 3, 2000 the plaintiff was granted a summary judgment in the amount of
$699,231.06 with respect to the Company. The plaintiff has taken no action to
collect that judgment and the parties are in settlement negotiations with
respect to that matter and the plaintiff's action against Adam Linter with
respect to his alleged personal guarantee of the Company's obligations.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(a) Not applicable.
(b) Not applicable.
(c) On January 13, 2000, the Company issued 20,000 shares of Common Stock to
its landlord as part of a previously reported stipulated judgment. Based on
the landlord's access to Company information and investment sophistication,
the issuance was made in reliance on the exemption in Section 4(2) of the
Securities Act because no public offering was involved.
On January 13, 2000, in return for services rendered and liability on a
personal guarantee of a Company obligation, the Company issued to Adam
Linter (i) 500,000 shares of Common Stock and (ii) warrants to purchase
another 500,000 shares for $0.10 per share until January 14, 2005. Based on
Mr. Linter's access to information as a Company officer and director and
his level of investment sophistication, the shares and warrants were issued
in reliance on the exemption provided in Section 4(2) of the Securities Act
of 1933 because no public offering was involved.
On February 8, 2000, the Company issued 5,000 shares of Common Stock to
Steven Raft for accounting services. Based on Mr. Raft's access to
information as a former officer of the Company and his level of investment
sophistication, the shares were issued in reliance on the exemption
provided in Section 4(2) of the Securities Act of 1933 because no public
offering was involved.
On February 22, 2000, the Company issued 700,000 shares of Common Stock to
Peter Rettman, 500,000 of which were issued for $50,000 in cash pursuant to
his exercise of previously granted warrants, and the balance of which were
issued for an additional payment of $50,000 in cash. Based on Mr. Rettman's
access to Company information and his level of investment sophistication,
the shares were issued in reliance on the exemption provided in Section
4(2) of the Securities Act of 1933 because no public offering was involved.
(d) Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
The Company is in default in its obligations to virtually all of its
creditors. The Company is also in default as to the payment of principal
and interest on a $125,000 loan from Wilmington Trust Company, Trustee for
Andrea B. Currier, a $250,000 loan from Michael Fuchs and a $100,000 loan
from Wolfgang Struss. Such defaults will continue until funds are obtained
as described in Part I above.
ITEM 5. OTHER INFORMATION
On February 10, 2000, the Company's 900,000 publicly traded Common Stock
Purchase Warrants expired according to their terms. No warrants were
exercised prior to their expiration.
9
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following Exhibit is attached hereto:
EXHIBIT NO. DESCRIPTION
27 Financial Data Schedule
(b) No reports on Form 8-K were filed during the Company's fiscal quarter ended
March 31, 2000.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant has
caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.
TOMORROW'S MORNING, INC.
Dated: May 18, 2000 By: /s/ ADAM LINTER
---------------------------------------
Adam Linter, President and Treasurer
10
<PAGE>
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION
27 Financial Data Schedule
11
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C> <C> <C>
<C>
<PERIOD-TYPE> 9-MOS 9-MOS 3-MOS 3-MOS
OTHER
<FISCAL-YEAR-END> JUN-30-2000 JUN-30-1999 JUN-30-2000 JUN-30-1999
JUN-30-2000
<PERIOD-START> JUL-01-1999 JUL-01-1998 JAN-01-2000 JAN-01-1999
JUL-01-1992
<PERIOD-END> MAR-31-2000 MAR-31-1999 MAR-31-2000 MAR-31-1999
MAR-31-2000
<CASH> 279 (391) 0 0
0
<SECURITIES> 0 0 0 0
0
<RECEIVABLES> 0 28,508 0 0
0
<ALLOWANCES> 0 0 0 0
0
<INVENTORY> 0 0 0 0
0
<CURRENT-ASSETS> 115,018 133,007 0 0
0
<PP&E> 142,698 135,697 0 0
0
<DEPRECIATION> 84,325 50,803 0 0
0
<TOTAL-ASSETS> 173,391 250,673 0 0
0
<CURRENT-LIABILITIES> 2,584,513 2,186,308 0 0
0
<BONDS> 0 0 0 0
0
0 0 0 0
0
0 0 0 0
0
<COMMON> 13,043,486 12,669,767 0 0
0
<OTHER-SE> 0 0 0 0
0
<TOTAL-LIABILITY-AND-EQUITY> 173,391 250,673 0 0
0
<SALES> 0 0 0 0
0
<TOTAL-REVENUES> 0 3,144 0 0
552,845
<CGS> 0 0 0 0
0
<TOTAL-COSTS> 0 906 0 0
3,313,352
<OTHER-EXPENSES> 441,367 413,944 178,052 100,634
12,249,785
<LOSS-PROVISION> 0 0 0 0
0
<INTEREST-EXPENSE> 59,062 51,470 19,686 19,690
443,700
<INCOME-PRETAX> (500,429) (463,176) (197,738) (120,324)
(15,453,992)
<INCOME-TAX> 0 0 0 0
4,800
<INCOME-CONTINUING> (500,429) (463,176) (197,738) (120,324)
(15,458,792)
<DISCONTINUED> 0 0 0 0
0
<EXTRAORDINARY> 0 0 0 0
0
<CHANGES> 0 0 0 0
0
<NET-INCOME> (500,429) (463,176) (197,738) (120,324)
(15,458,792)
<EPS-BASIC> (0.13) (0.14) (0.05) (0.04)
0
<EPS-DILUTED> (0.13) (0.14) (0.05) (0.04)
0
</TABLE>
