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.
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the transition period from______to______.
Commission file number: 000-22373
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CHATTOWN.COM NETWORK, INC.
--------------------------
(Exact name of small business issuer as specified in its charter)
Delaware 58-202783
-------- ---------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
200 South Washington Blvd., Suite 9, Sarasota, Florida 34236
------------------------------------------------------------
(Address of principal executive office) (Zip Code)
(941) 957-1009
--------------
(Issuer's telephone number)
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 (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 XX No
--
The number of outstanding shares of the issuer's common stock, $0.001 par value
(the only class of voting stock), as of May 5, 2000 was 25,294,656.
<PAGE>
TABLE OF CONTENTS
PART I
ITEM 1. FINANCIAL STATEMENTS..................................................3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS..................................4
PART II
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.............................6
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...................6
ITEM 5. OTHER INFORMATION.....................................................7
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K......................................7
SIGNATURES.....................................................................8
INDEX TO EXHIBITS..............................................................9
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2
<PAGE>
ITEM 1. FINANCIAL STATEMENTS
As used herein, the term "Company" refers to Chattown.com Network, Inc., a
Delaware corporation, and its subsidiaries and predecessors unless otherwise
indicated. Consolidated, unaudited, condensed interim financial statements
including a balance sheet for the Company as of the quarter ended March 31, 2000
and statements of operations, and statements of cash flows for the interim
period up to the date of such balance sheet and the comparable period of the
preceding year are attached hereto as Pages F-1 through F-5 and are incorporated
herein by this reference.
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3
<PAGE>
ITEM 1. FINANCIAL STATEMENTS
INDEX TO FINANCIAL STATEMENTS
PAGE
Consolidated Unaudited Condensed Balance Sheet March 31, 2000................F-2
Consolidated Unaudited Condensed Statements of Operations
March 31, 2000 and 1999......................................................F-3
Consolidated Unaudited Condensed Statements of Cash Flows
March 31,2000 and 1999.......................................................F-4
Notes to Consolidated Unaudited Condensed Financial Statements
March 31, 2000...............................................................F-5
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F-1
<PAGE>
Chattown.com Network, Inc.
Unaudited Condensed Balance Sheet
<TABLE>
<CAPTION>
March 31, 2000 December 31,
(unaudited) 1999
--------------------- ----------------------
ASSETS
<S> <C> <C>
Current Assets: $ $
Cash and cash equivalents 9,423 10,263
Prepaid expense - 17,500
Other - -
--------------------- ----------------------
Total current assets 9,423 27,763
TOTAL ASSETS $ 9,423 $ 27,763
===================== ======================
LIABILITIES AND STOCK HOLDERS' EQUITY
Current Liabilities:
Accounts payable $ - $ -
Accrued liabilities 13,450 -
Amounts due to affiliate - -
--------------------- ----------------------
Total current liabilities 13,450 -
Stockholders' equity
Preferred stock ($.001 par value, 2,000,000
shares authorized; no share issued and
outstanding - -
Common stock $.001 par value shares, 200,000,000
shares authorized; 11,294,656 shares issued
and outstanding March 31, 2000 and
December 31, 1999, respectively 11,295 11,495
Additional paid in capital 12,520,467 12,520,267
Accumulated Deficit (12,535,789) (12,503,999)
--------------------- ----------------------
Total stockholders' equity (4,027) 27,763
--------------------- ----------------------
TOTAL LIABILITIES AND EQUITY $ 9,423 $ 27,763
===================== ======================
</TABLE>
See notes to financial statements
F-2
<PAGE>
Chattown.com Network, Inc.
Unaudited Condensed Statements of Operations
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
March 31, 2000 March 31, 1999
-------------- --------------
REVENUE
<S> <C> <C>
Interest and other income $ - $ 915
License fees - 20,000
Investment income - -
------------------------ -------------------------
Total Revenue - 20,915
EXPENSES
Interest expense - 3,702
Selling, general and administrative
Audit expense 13,450 -
Other 840 112,805
Stock Compensation expense 17,500 -
------------------------ -------------------------
Total Expenses 31,790 116,507
------------------------ -------------------------
NET LOSS (from continuing operations) $ (31,790) $ (95,592)
------------------------ -------------------------
Income taxes - -
NET LOSS $ (31,790) $ (95,592)
------------------------ -------------------------
BASIC AND DILUTED LOSS PER
COMMON SHARE $ 0.00 $ (0.01)
------------------------ -------------------------
BASIC AND DILUTED WEIGHTED
AVERAGE SHARES OUTSTANDING 11,294,656 10,994,656
======================== =========================
</TABLE>
See notes to financial statements
F-3
<PAGE>
Chattown.com Network, Inc.
Unaudited Condensed Statements of Cash Flows
<TABLE>
<CAPTION>
Three Months Three Months
Ended March Ended March
31, 2000 31, 1999
------------------ ------------------
CASH FLOWS FROM OPERATION ACTIVITIES
<S> <C> <C>
Net loss $ (31,790) $ (95,592)
Adjustments to reconcile net loss to net cash provided (used) by
operating activities:
Depreciation and amortization - 4,256
Increase in accrued liabilities 13,450 191,376
Stock compensation expense 17,500 -
------------------ ------------------
Total adjustments 30,950 195,632
NET CASH PROVIDED (USED) BY OPERATING
ACTIVITIES (840) 100,040
------------------ ------------------
CASH FLOWS PROVIDED BY INVESTING ACTIVITIES - -
------------------ ------------------
CASH FLOWS FROM FINANCING ACTIVITIES - -
------------------ ------------------
NET INCREASE (DECREASE) IN CASH EQUIVALENTS (840) 100,040
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD 10,263 2,900
------------------ ------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 9,423 $ 102,940
================== ==================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash paid during the period for interest $ - $ 3,702
================== ==================
</TABLE>
See notes to financial statements
F-4
<PAGE>
CHATTOWN.COM NETWORK, INC.
NOTES TO CONSOLIDATED UNAUDITED CONDENSED FINANCIAL STATEMENTS
March 31, 2000
1. Basis of Presentation
The accompanying consolidated unaudited condensed financial statements have been
prepared by management in accordance with the instructions in Form 10-QSB and,
therefore, do not include all information and footnotes required by generally
accepted accounting principles and should, therefore, be read in conjunction
with the Company's Annual Report to Shareholders on Form 10-KSB for the fiscal
year ended December 31, 1999. These statements do include all normal recurring
adjustments which the Company believes necessary for a fair presentation of the
statements. The interim operations results are not necessarily indicative of the
results for the full year ended December 31, 2000.
2. Year 2000 Compliance
As of March 31, 2000, the Company had not experienced any problems related to
the Y2K problem.
3. Subsequent Events.
On April 10, 2000, Chattown.com Network, Inc., a Delaware corporation
("Registrant"), closed upon a Stock Purchase Agreement ("Agreement") with Thomas
Clay and Mark Schellenberger, two individuals ("Sellers). Pursuant to the
Agreement Registrant purchased a 100% interest in Value Plus Marketing, Inc., a
private Internet company headquartered in Sarasota, Florida from Sellers for
Twenty Four Million shares of the common stock of Registrant (Twelve Million to
Mr. Clay and Twelve Million to Mr. Schellenberger). The number of shares was an
arbitrary number agreed upon between Sellers and the Registrant. The shares
issued to Sellers were newly issued shares from the Registrant. The 24,000,000
shares of the Registrant's common stock is equivalent to approximately 69% of
the Registrant's issued and outstanding shares of its common stock.
Consequently, Sellers acquired a majority interest in the Registrant's shares of
common stock, replacing A-Z Professional Consultants, Inc. which prior to the
transaction held 87.5% of the Registrant's issued and outstanding shares of
common stock. Mr. Clay and Mr. Schellenberger now have effective control of the
Company.
4. Additional footnotes included by reference
Except as indicated in Notes above, there have been no other material changes in
the information disclosed in the notes to the financial statements included in
the Company's Annual Report on Form 10-KSB for the year ended December 31, 1999.
Therefore, those footnotes are included herein by reference.
F-5
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULT OF OPERATION
General
As used herein the term "Company" refers to Chattown.com Network, Inc., its
subsidiaries and predecessors, unless indicated otherwise. Chattown.com Network,
Inc. was originally incorporated in the State of Delaware on January 6, 1993, as
Vaxcel, Inc. The Company was formed as a wholly-owned subsidiary of CytRx
Corporation ("CytRx"). In May 1997, the Company completed a merger with Zynaxis,
Inc. (Zynaxis), resulting in the issuance of an aggregate of 12.5% of its
outstanding (post-merger) shares of common stock to the former shareholders of
Zynaxis. The Company has historically engaged in the development and
commercialization of vaccine adjuvants and delivery systems and a novel vaccine
for the treatment of cancer.
However, in the second quarter of 1999 the Company sold all the rights to its
technologies for cash and discontinued all of its operations. In addition, CytRx
terminated its license of Optivax to the Company, resulting in the assignment to
CytRx of the Company's rights and obligations under its license agreement to
Corixa Corporation.
On June 2, 1999, A-Z Professional Consultants, Inc., a Utah corporation ("A-Z"),
entered into a Stock Acquisition Agreement ("Agreement") with CytRx Corporation,
a Delaware corporation ("Cytrx"), the parent company of Vaxcel. Pursuant to the
Agreement A-Z purchased Nine Million Six Hundred Twenty-Five Thousand
(9,625,000) shares of the common stock of the Company from CytRx. For more
information on this transaction, See Form 8-K filed September 20, 1999.
The Company during the third quarter of 1999 settled all of its liabilities from
the proceeds it collected from the sale of the technologies it held. The Company
remained a shell company with no operations until April 10, 2000.
On February 22, 2000, The Company amended its Articles of Incorporation to
change its name from Vaxcel, Inc. to Chattown.com Network, Inc.
On April 10, 2000, Chattown.com Network, Inc., a Delaware corporation
("Registrant"), closed on a Stock Purchase Agreement ("Agreement") with Thomas
Clay and Mark Schellenberger, two individuals ("Sellers). Pursuant to the
Agreement the Company purchased a 100% interest in Value Plus Marketing, Inc., a
private Internet company headquartered in Sarasota, Florida, from Sellers for
Twenty Four Million shares of the common stock of Registrant (Twelve Million to
Mr. Clay and Twelve Million to Mr. Schellenberger). The number of shares was an
arbitrary number agreed upon between Sellers and the Company. The shares issued
to Sellers were newly issued shares of the Company. The 24,000,000 shares of the
Company's common stock is equivalent to approximately 69% of the Company's
issued and outstanding shares of its common stock. Consequently, Sellers
acquired a majority interest in the Company's shares of common stock, replacing
A-Z Professional Consultants, Inc. which prior to the transaction held 87.5% of
the Company's issued and outstanding shares of common stock. Mr. Clay and Mr.
Schellenberger now have effective control of the Company.
4
<PAGE>
At the time of its acquisition, Value Plus Marketing Inc. owned several web
sites including the following:
Interactive Websites Search Portal Interactive Dating Website
-------------------- ------------- --------------------------
Chattown.com HoundDog.com Loversonly.com
Chattersworld.com
1chatblvd.com
Chitterchatter.com
Chatsports.com
Political Web site
------------------
Chatpolitics.com
On April 10, 2000, pursuant to a directors consent to action without a meeting
dated April 7, 2000, Richard Surber's resignation as President and Director was
accepted and Thomas Clay accepted his appointment as President and as a Director
of the Registrant. BonnieJean C. Tippetts' resignation as an officer and as a
Director was also accepted and Mark Schellenberger accepted his appointment as
Vice President, Secretary and as a Director.
Liquidity and Capital Resources
At March 31, 2000, the Company had current assets of $9,423 and total assets of
$9,423, as compared to $27,763 and $27,763, respectively, at December 31, 1999.
At March 31, 2000 the Company had a working capital deficit of $4,027.
The Company discontinued its operations during the second quarter of 1999. From
approximately June of 1999, until April 10, 2000, the Company was a public shell
entity whose purpose was to find a company with which it could merge or
otherwise acquire operations. On April 10, 2000 the Company closed on the
acquisition of Value Plus Marketing, Inc.
Results of Operations
The Company recorded net losses of $31,790 and $95,592 for the three months
ended March 31, 2000 and three month period ended March 31, 1999. The
significant drop in net losses resulted from the fact that in the first quarter
of 1999, the Company was still involved in operations. During the quarter ended
March 31, 2000, the Company was a shell company without any business or
operations.
Total expenses in the amount of $31,790 were incurred during the three month
period ending March 31, 2000, consisted of various filing fees, registration
fees, legal, accounting and other professional fees.
5
<PAGE>
PART II -- OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On February 3, 2000, the Company amended its Articles of Incorporation to change
the number of its authorized $0.001 par value shares of common stock from
30,000,000 to 200,000,000.
On April 10, 2000, the Company issued 12,000,000 shares of common stock to
Thomas Clay and 12,000,000 shares of common stock to Mark Schellenberger in
exchange for 100% of the issued and outstanding stock of Value Plus Marketing,
Inc. These shares were issued pursuant to section 4(2) of the Securities Act of
1933 in an isolated private transaction by the Company which did not involve a
public offering. The Company made this offering based on the following factors:
(1) The issuance was an isolated private transaction by the Company which did
not involve a public offering; (2) there were only two offerees who were issued
stock for a controlling interest in another company; (3)the negotiations for the
sale of the stock took place directly between the offerees and the Company.; (4)
there were no subsequent or contemporaneous public offerings of the stock; (5)
the stock was not broken down into smaller denominations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On January 31, 2000, the Board of Directors and a person owning the majority of
the outstanding voting securities of the Company unanimously adopted, ratified
and approved a resolution to amend the Articles of Incorporation of the Company.
The Amendment provided that the number of authorized $0.001 par value shares of
the Common Stock of the Company was increased from 30,000,000 to 200,000,000.
The number of preferred shares authorized remained at 2,000,000. The Company
filed the Amendment to its Articles of Incorporation with the State of Delaware
on February 3, 2000.
On February 16, 2000, the Board of Directors and a person owning the majority of
the outstanding voting securities of the Company unanimously adopted, ratified
and approved a resolution to amend the Articles of Incorporation of the Company.
The Amendment Changed the name of the Company from Vaxcel, Inc. to Chattown.com
Network, Inc. The Company filed this Amendment to its Articles of Incorporation
setting forth the name change with the State of Delaware on February 22, 2000.
Section 242 of the corporation laws of the State of Delaware provides an outline
of the scope of amendments that a Delaware corporation can make to its Articles
of Incorporation. These include the amendments discussed herein. The procedure
and requirements to effect an amendment to the Articles of Incorporation of a
Delaware corporation are set forth in Section 242. Section 242 provides that the
proposed amendments must first be adopted by the Board of Directors and then
submitted to shareholders for their consideration at an annual or special
meeting and must be approved by a majority of the outstanding voting securities.
Section 228 of the Delaware corporation laws provides that any action required
to be taken at a special or annual meeting of the stockholders of a Delaware
corporation may be taken by written consent, in lieu of a meeting, if the
consent is signed by stockholders owning at least a majority of the voting
power.
The Board of Directors of the Company and a person owning in excess of 50% of
the outstanding voting securities of the Company adopted, ratified and approved
the name change and change in the authorized shares of the Company. No further
vote was required or necessary to effect the amendments.
6
<PAGE>
ITEM 5. OTHER INFORMATION.
On March 24, 2000, A-Z Professional Consultants, Inc., the owner of a majority
of the issued and outstanding shares of the Company, entered into an agreement
with the Company wherein it agreed to allow cancellation of two hundred thousand
(200,000) shares of the common stock of the Company, which it owned, in exchange
for an agreement by the Company not to effect any reverse split of the Company's
common voting stock for a period of twenty-four (24) months.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits Exhibits required to be attached by Item 601 of Regulation S-B
are listed in the Index to Exhibits on page 9 of this Form 10-QSB, and
are incorporated herein by this reference.
(b) Reports on Form 8-K:
(i) The Company filed a Form 8-K on April 20, 2000 reporting the
Acquisition of Value Plus Marketing, Inc., an Internet incubator
company.
(ii) The Company filed a Form 8-K/A on March 24, 2000 reporting a
change in certifying accountant.
(iii) The Company filed a Form 8-K on March 17, 2000 reporting a
change in certifying accountant.
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7
<PAGE>
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CHATTOWN.COM NETWORK, INC.
Signature Date
- --------- ----
/s/ Thomas Clay
___________________________ May 11, 2000
Thomas Clay
President and Director
/s/ Mark Schellenberger
___________________________ May 11, 2000
Mark Schellenberger
Secretary and Director
8
<PAGE>
INDEX TO EXHIBITS
EXHIBIT PAGE
NO. NO. DESCRIPTION
- ------- ---- -----------
2 * Acquisition Agreement closed April 10, 2000. Incorporated by
reference from the Form 8-K filed April 20, 2000.
3(i) * Articles of amendment to Articles of Incorporation of the
Company filed February 3, 2000.
3(ii) * Articles of amendment to Articles of Incorporation of the
Company filed February 22, 2000.
27 10 Financial Data Schedule.
* Previously filed as indicated and incorporated herein by reference from
the referenced filings previously made by the Company.
9
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
UNAUDITED CONDENSED FINANCIAL STATEMENTS FILED WITH THE COMPANY'S MARCH 31,
2000, QUARTERLY REPORT ON FORM 10-QSB AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001029802
<NAME> Chattown.com Network, Inc.
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1
<CASH> 9,423
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 9,423
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 9,423
<CURRENT-LIABILITIES> 13,450
<BONDS> 0
0
0
<COMMON> 11,295
<OTHER-SE> (15,322)
<TOTAL-LIABILITY-AND-EQUITY> 9,423
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 30,950
<OTHER-EXPENSES> 840
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (31,790)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (31,790)
<EPS-BASIC> (.00)
<EPS-DILUTED> (.00)
</TABLE>
