U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
Quarterly Report Under
the Securities Exchange Act of 1934
For Quarter Ended: September 30, 2000
Commission File Number: 0-25388
NPS INTERNATIONAL CORPORATION
-----------------------------
(Exact name of small business issuer as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation or organization)
86-0214815
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(IRS Employer Identification No.)
4400 US Highway 9.
Freehold, N.J.
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(Address of principal executive offices)
812 Proctor Ave.
Ogdensburg, N.Y. 13669
----------------------
(Former name or former address, if changed since last report)
07728
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(Zip Code)
1-800-731-8482
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(Issuer's Telephone Number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 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 .
---- ----
The number of shares of the registrant's only class of common stock issued and
outstanding, as of November 7, 2000 was 17,236,411 common shares.
<PAGE>
NPS INTERNATIONAL CORPORATION
AND SUBSIDIARIES
CONTENTS
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements Page Number
Condensed Consolidated Balance Sheets as of
September 30, 2000 (unaudited) and December 31, 1999 3
Condensed Consolidated Statements of Operations for
the three-month and nine-month periods ended
September 30, 2000 and 1999 (unaudited) 4
Condensed Consolidated Statements of Cash Flows
for the nine-month periods ended September 30, 2000
and 1999 (unaudited) 5
Notes to Condensed Consolidated Financial Statements
(unaudited) 6-7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-15
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 16
2
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<TABLE>
NPS INTERNATIONAL CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
<CAPTION>
(Unaudited)
September 30, December 31,
2000 1999
------------ ----------
<S> <C> <C>
Current assets:
Cash $ 57,708 $ 134,330
Accounts receivable 236,297 144,180
Prepaid expenses 6,053 17,461
Inventories 151,751 200,855
Due from affiliate 6,394 6,400
------------ ----------
Total current assets 458,203 503,226
------------ ----------
Property and equipment, net 86,154 147,048
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Other assets:
Goodwill, net 332,902 357,129
Deferred charges and other 428,570 322,282
------------ ----------
761,472 679,411
------------ ----------
$ 1,305,829 $1,329,685
============ ==========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current portion of long-term debt from business combination $ 228,990 $ 228,990
Note payable 21,810 -
Accounts payable and accrued expenses 708,341 561,357
Accrued taxes 45,099 58,955
Loan payable - 152,000
Notes payable - stockholder 70,000 70,092
Convertible debt 175,000 175,000
Payable under service agreement 84,639 179,393
------------ ----------
Total current liabilities 1,333,879 1,425,787
------------ ----------
Stockholders' equity (deficit):
Common stock, $.0001 par value,
50,000,000 shares authorized;
13,736,411 shares outstanding in 2000
10,566,403 shares outstanding in 1999 1,374 1,063
Additional paid-in capital 1,319,717 680,528
Accumulated deficit (1,325,150) (757,530)
Accumulated other comprehensive loss (23,991) (20,163)
------------ ----------
(28,050) (96,102)
------------ ----------
$ 1,305,829 $1,329,685
============ ==========
</TABLE>
3
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<TABLE>
NPS INTERNATIONAL CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>
(Unaudited) (Unaudited)
Nine-month period ended Three-month period ended
September 30, September 30,
----------------------- ------------------------
2000 1999 2000 1999
---------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Revenues $1,667,908 $ 1,882,124 $ 473,428 $ 521,088
Direct costs 1,521,179 1,545,774 459,781 428,904
---------- ----------- ----------- ------------
Gross profit 146,729 336,350 13,647 92,184
---------- ----------- ----------- ------------
Operating expenses (income):
Selling and administrative 630,350 738,815 156,140 214,112
Amortization 24,226 31,303 8,075 10,434
Interest expense 59,141 47,507 18,122 12,668
Interest income (8,457) (9,524) (2,386) (2,616)
Loss (gain) on sale of assets (144) (1,587) (5) (1,587)
Foreign taxes 9,233 26,747 (4,574) 3,203
---------- ----------- ----------- ------------
714,349 833,261 175,372 236,214
---------- ----------- ----------- ------------
Loss from continuing operations (567,620) (496,911) (161,725) (144,030)
---------- ----------- ----------- ------------
Discontinued operations:
Income from divested operations - 6,650 - -
Gain on disposal of divested operations - 26,487 - -
---------- ----------- ----------- ------------
- 33,137 - -
---------- ----------- ----------- ------------
Net loss $ (567,620) $ (463,774) $ (161,725) $ (144,030)
========== =========== =========== ============
(Loss) income per share:
Continuing operations $ (0.04) $ (0.04) $ (0.01) $ (0.01)
Discontinued operations - - - -
---------- ----------- ----------- ------------
$ (0.04) $ (0.04) $ (0.01) $ (0.01)
========== =========== =========== ============
Weighted average shares outstanding 12,577,214 10,527,658 13,736,411 10,566,394
========== =========== =========== ============
</TABLE>
4
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<TABLE>
NPS INTERNATIONAL CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
(Unaudited)
Nine-month period ended
September 30,
------------------------
2000 1999
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (567,620) $ (463,774)
----------- -----------
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 85,121 102,013
Non-cash expenses of divested operations - 453
Obligations satisfied through issuance of common stock 518,015 141,000
Gain on sale of assets - (1,587)
Gain on sale of divested operations - (26,487)
Changes in assets and liabilities:
(Increase) decrease in accounts receivable (92,117) (35,990)
(Increase) decrease in prepaid expenses 11,408 (1,229)
(Increase) decrease in inventory 49,104 (31,074)
Increase (decrease) in accounts payable and accrued expenses (115,218) 208,022
Increase (decrease) in accrued taxes (13,856) (33,976)
Increase (decrease) in payable under service agreement (94,754) (72,888)
----------- -----------
Total adjustments 347,703 248,257
----------- -----------
Net cash used in operating activities (219,917) (215,517)
---------- -----------
Cash flows from investing activities:
Capital expenditures - (108,221)
Proceeds from sale of assets - 1,587
Loans to affiliate - (5,000)
Proceeds from note receivable of divested segment - 53,000
----------- -----------
Net cash used in investing activities - (58,634)
----------- -----------
Cash flows from financing activities:
Loans from affiliate 121,485 145,000
Principal payments on loan obligations - (50,000)
Proceeds from loans - 145,000
Proceeds from note payable 21,810 -
----------- -----------
Net cash provided by financing activities 143,295 240,000
----------- -----------
Net decrease in cash (76,622) (34,151)
Cash balance at beginning of period 134,330 217,535
----------- -----------
Cash balance at end of period $ 57,708 $ 183,384
=========== ===========
</TABLE>
5
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NPS INTERNATIONAL CORPORATION
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2000
(unaudited)
1. Unaudited interim financial statements
The accompanying unaudited financial statements have been prepared in
accordance with the instructions for Form 10-QSB and do not include all
of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion
of management, all adjustments, consisting only of normal recurring
adjustments considered necessary for a fair presentation, have been
included. Operating results for any quarter are not necessarily
indicative of the results for any other quarter or for the full year.
These statements should be read in conjunction with the financial
statements of NPS International Corporation formerly (National Industry
Security Corporation) and notes thereto included in the Company's
Annual Report on Form 10-KSB for the year ended December 31, 1999.
2. Divested operations
Effective March 31, 1999, the Company disposed of its security division
which conducted business under the name of National Industrial Security
Corporation ("NISCO"). The results of NISCO have been reported
separately as a divestiture in the consolidated statements of
operations.
Assets and liabilities of NISCO which were divested consisted of the
following:
Accounts receivable $ 78,625
Other current assets 10,955
Intangible assets, net 7,643
Accounts payable and accrued expenses (48,710)
---------
Net assets of divested segment $ 48,513
=========
The operations of NISCO were acquired in a business combination on
November 7, 1998, and were included in the Company's 1998 consolidated
statement of operations for the period from the date of acquisition
through December 31, 1998.
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2. Divested operations (continued)
The following table summarizes selected financial data of the Company's
divested operations:
November 7, 1998
(date of acquisition)
Three months ended through
March 31, 1999 December 31, 1998
------------------ ------------------
Revenues $166,104 $120,206
Expenses 159,454 116,932
-------- --------
Income from divested operations $ 6,650 $ 3,274
======== ========
Such amounts have not been included in operating revenues or expenses
in the accompanying consolidated statements of operations.
Under the terms of the agreement, the Company sold the assets of NISCO
for a $75,000 note, thereby realizing a gain on divestiture of $26,487.
The note bears interest at the rate of 8% per annum. The balance of the
note was $6,394 at September 30, 2000.
3. Subsequent event
Effective October 17, 2000, the Company acquired certain assets from
MaxPlanet Corp., a Delaware publicly held corporation ("MPC") in
exchange for issuance of 3.5 million shares of the Company's common
stock in favor of MPC, which shares were valued at $123,000. The assets
acquired include the rights to three (3) domain names, including
"oneclass.com," "1class.com" and "telephonebook.net" along with related
business plans, servers, database and software previously developed by
MPC.
The relevant agreement was executed in August 2000; however, the
agreement provides that the effective date of the agreement would not
be until such time as the assets had been fully delivered to the
Company. Final delivery of the relevant URL's and platforms was
completed on October 17, 2000.
In addition, the Company has also agreed to lease its corporate office
from MPC and use the services of MPC's Internet development and
production facility in Miami, Florida in order to generate users and
customers to products and services to be offered by the Company. This
agreement requires the Company to pay $5,000 per month to MPC until
September 2001, which term will automatically renew for successive one
year terms until written notice of termination is provided. The Company
has also agreed, among other things, to pay MPC a minimum quarterly fee
of 100,000 shares of the Company's common stock for supporting the
Company's growth.
As a result of this acquisition, the principal business plan of the
Company has changed. The Company now intends to acquire, joint venture,
advertise, promote and market unaffiliated companies worldwide in the
Internet, biotechnology, genomics, pharmaceuticals and life-sciences
industries by offering multiple solutions and platforms for these
companies to promote their advertisements and content. The Company also
intends to provide solutions for public and private companies to raise
capital, raise business awareness and effect strategic mergers,
acquisitions and other business combinations.
7
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PART I
ITEM 1. FINANCIAL STATEMENTS.
The unaudited financial statements for the three-month and nine-month periods
ended September 30, 2000, are attached hereto.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with the Company's
unaudited financial statements and notes thereto included herein. In connection
with, and because it desires to take advantage of, the "safe harbor" provisions
of the Private Securities Litigation Reform Act of 1995, the Company cautions
readers regarding certain forward-looking statements in the following discussion
and elsewhere in this report and in any other statement made by, or on the
behalf of the Company, whether or not in future filings with the Securities and
Exchange Commission. Forward-looking statements are statements not based on
historical information and which relate to future operations, strategies,
financial results or other developments. Forward-looking statements are
necessarily based upon estimates and assumptions that are inherently subject to
significant business, economic and competitive uncertainties and contingencies,
many of which are beyond the Company's control and many of which, with respect
to future business decisions, are subject to change. These uncertainties and
contingencies can affect actual results and could cause actual results to differ
materially from those expressed in any forward-looking statements made by, or on
behalf of, the Company. The Company disclaims any obligation to update
forward-looking statements.
OVERVIEW
In November 1998, the Company acquired all of the issued and outstanding
securities of Naidger Power Systems, Inc., which resulted in a significant
change in the Company's principal business, from a security guard business to a
holding company whose subsidiaries are engaged in the production of metal parts
and sub-assemblies, primarily the gas meter, white goods and auto parts sector,
as well as the design and production of tools, injection molds, dies and
assembly jigs for use in the production of gas meters, white goods, auto parts
and telecommunication equipment. As a result, management is presenting the
following discussion as if the Company had acquired and operated the aforesaid
businesses for the previous two-year periods, in order to provide a better
analysis of the Company's current and prior results of operations.
During the quarter ended September 30, 2000, management reviewed and revised the
existing business plan of the Company. In this regard, subsequent to September
30, 2000, the Company added various new members of management. During October
2000, the Company acquired certain assets in exchange for 3.5 million shares of
the Company's common stock. The assets acquired include the rights to three
Internet domain names, along with related business plans, servers, database and
software.
As a result of this acquisition, the principal business plan of the Company has
changed. The Company now intends to acquire, joint venture, advertise, promote
and market unaffiliated companies worldwide in the Internet, biotechnology,
genomics, pharmaceuticals and life-sciences industries by offering multiple
solutions and platforms for these companies to promote their advertisements and
content. The Company also intends to provide solutions for public and private
companies to raise capital, raise business awareness and effect strategic
mergers, acquisitions and other business combinations.
8
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Due to the change in the business plan, management is exploring its options with
regard to its manufacturing operations in Poland. Such options may include the
sale or spin-off of Polcorp.
The following information is intended to highlight developments in the Company's
operations to present the results of operations of the Company, to identify key
trends affecting the Company's businesses and to identify other factors
affecting the Company's results of operations for the nine-month periods ended
September 30, 2000 and 1999.
RESULTS OF OPERATIONS
Comparison of Results of Operations for the Nine-Month Periods Ended
September 30, 2000 and 1999
During the nine-month period ended September 30, 2000, the Company's revenues
decreased, as it generated revenues of $1,667,908, compared to revenues of
$1,882,124 for the similar period in 1999, a decrease of $214,216 (11%). This
decrease in revenues was attributable to a 2% decrease in revenues as reported
in zlotys (the local currency in Poland), and a decrease of 9% resulting from a
change in the exchange rate from 4.1 zlotys per dollar at September 30, 1999 to
4.5 zlotys per dollar at September 30, 2000. In the nine-month period ended
September 30, 2000, costs of sales decreased 2%, to $1,521,179, compared to
$1,545,774 for the similar period in 1999, a decrease of $24,595. This was due
primarily to a 8% increase in costs of sales as reported in zlotys, and a
decrease of 10% resulting from the change in the exchange rate. Operating
expenses were $714,349 for the nine months ended September 30, 2000, compared to
$833,261 for the similar period in 1999, a decrease of $118,912 (14%). This
decrease came about due primarily to decreases in selling and administrative
expenses. Such decrease was principally due to decreases in professional fees in
comparison to the same period for the previous year.
PLAN OF OPERATION
The Company intends to develop a multiple-brand strategy of products and
services that appeal to complementary and diverse groups of members or users of
the Internet. The Company intends to also develop a multiple-revenue stream
strategy designed to broaden the sources of revenues from its properties and
services beyond subscription revenues to include revenues from sources such as
advertising, commerce, licensing fees and transaction fees. The Company intends
to augment its online services with branded properties that add features or
content across multiple services or platforms. Management believes that
following these strategies should enable the Company to operate its business and
improve its services and products in a cost-effective manner by utilizing a
shared infrastructure performing core functions.
The Company's service intends to provide subscribers with a global, interactive
community offering a wide variety of content, features and tools. The Company's
service intends to also include simple access to the Internet with search
functionality through the Company's WebFind. The range of content, features and
tools offered on the Company's service isexpected to include the following:
- Internet Access.
- Electronic mail services.
- Public bulletin boards.
- The Buddy List feature.
- Instant Messenger service.
- An online community center.
- Public or private "meeting rooms" and interactive "chat" rooms.
- Guest interviews and live "auditorium" events.
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Content on the Company's service will be organized into channels, allowing
members to navigate the service easily to find areas of interest. Each of the
following twenty three channels offers informational content, commerce and
community opportunities:
- The Company Today
- News
- Sports
- Influence
- Travel
- International
- Personal Finance
- Work Place
- Computing
- Research & Learn
- Entertainment
- Games
- Interests
- On-Line Auctions
- Lifestyles
- Shopping
- Health
- Families
- Kids Only
- Local
- B2B
- B2B Yellow Pages (part of the Company's acquisition strategy of
www.telephonebook.net from MaxPlanet, Corp.)
- Consumer Shopping Mall
Personalization and Control Features are expected to be implemented to allow
members to personalize their experience on the Company's service through a
number of features and tools, including:
1. A reminder service that sends e-mail in advance of important events.
2. Stock portfolios that automatically update market prices.
3. Mail Controls, which allow members to limit who may send them e-mail
and to block certain types of e-mail.
4. Favorite Places, which allows members to mark particular Web sites or
the Company areas.
5. Portfolio Direct and News Profiles, which send stories of particular
interest to members.
Company members are expected to be able to search the Internet and the Company's
exclusive B2B content without leaving the Company's service. The service intends
to also include "Company's Plus," a feature that should enable members to
connect to the Company's service through high-speed broadband technologies,
including DSL, cable, satellite and wireless and provide additional online
content to members connecting through such broadband technologies.
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The Company's content network is expected to also offer a network of local
content and community guides in over 60 U.S. cities, including Atlanta, Boston,
Chicago, Dallas, Denver, Detroit, Los Angeles, Minneapolis, Miami, Orlando,
Philadelphia, San Diego, San Francisco and Washington, D.C. This local content
will be developed to include original and third party news, sports, weather, a
local guide service with directory and classified listings.
Advertising and Commerce
An important component of the Company's strategy is to develop its Interactive
Online Services business in order to increase revenues from advertising and
commerce sources and from the sale of merchandise. The Company intends to
establish a wide variety of relationships with advertising and commerce partners
to grow and diversify its non-subscription based B2B revenues and to provide
subscribers on the Company's interactive B2B services with access to a broad
selection of competitively priced, easy-to-order products and services. The
Company intends to work to develop multiple revenue sources for its interactive
properties and services, and to broaden the scope of those revenue sources
beyond subscriptions and advertising fees to include revenues from additional
sources, such as transaction fees and licensing fees. The Company will attempt
to also expand the scope, range and types of businesses involved in advertising
and commerce relationships. The Company intends to enter into advertising
arrangements that encompass multiple brands within the Company's family of
brands.
The Company expects to offer its advertising and commerce partners a variety of
customized programs, which may include guaranteed numbers of impressions and
select sponsorship of particular online areas or Web pages for designated time
periods. As merchants recognize the value in reaching the Company's large,
growing and active subscriber base and users of its Web-based properties, the
Company should be able to earn additional revenues by offering selected
merchants exclusive rights to market particular goods or services within one or
more of the Company's online services and properties. In those transactions, the
Company intends to provide its commerce partners certain marketing and
promotional opportunities and, in return, receive cash payments, the opportunity
for revenue sharing, cross-promotions and competitive pricing and online
conveniences for subscribers. Certain of the transactions with partners also
include an equity component for the Company.
The advertising and commerce partnerships will also provide the users of the
Company's interactive services and properties with access to a diverse selection
of consumer products and services. The Company intends to also obtain revenues
from the sale of merchandise by offering for sale to subscribers on its
interactive services a number of computer and Internet online goods and
services, including hardware and software products and books and Company logo
merchandise. Merchandise will be promoted principally by means of promotional
"pop-up" screens and the Company intends to have its merchandise available in
online stores included in various channel stores and in specialized seasonal or
other targeted shops.
B2B&E-Commerce
The Company intends to create its own "OneClass (B2B) Mall" encouraging users to
participate in Business-to-Business (B2B) and Business to Consumer (B2C)
transactions. Jupiter Research reports that US B2B e-commerce is expected to
grow very rapidly over the next five years -- from $336 billion in 2000 to $6.3
trillion in 2005. Online B2B activity currently represents 3% of the B2B market,
but is expected to represent 42% by 2005. Dominating B2B e-commerce during this
period will supply chain trade.
In its report, US Business-to-Business Trade Projections, Jupiter highlights
five industries that are expected to conduct more than half buying and selling
online by 2004. The industries are: (i)
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aerospace and defense; (ii) chemicals; (iii) computer and telecommunications
equipment; (iv) electronics; and (v) motor vehicle and parts. Computer and
telecommunications equipment is expected to lead with $1 trillion online sales
by 2005. The other industries with sales over $500 billion will be food and
beverage, motor vehicles and parts, industrial equipment and supplies, and
construction and real estate.
B2B-AffiliateProgram
The Company's B2B affiliate program is expected to enable web sites listed on
the Company's site to become "affiliate content sites," to drive e-commerce
revenues with their content. The Company's B2B affiliates will be provided with
an entire suite of unique services and advanced technologies to let them:
1. Drive e-commerce revenues to their sites.
2. Easily manage thousands of merchant partnerships.
3. Diversify and maximize their revenue streams.
4. Enable millions of businesses and consumers to point, click and
purchase onto a site that they're interacting with for information,
products, services and entertainment that interests them without
leaving the Company's framework.
The Company's affiliate B2B program will be a sales distribution network that
matches online merchants' products and services to online content at the
consumer's point-of-interest, handling all aspects of the network for an
unlimited number of online merchants and content providers. The Company intends
to enter into an agreement with Commission Junction to have them audit
e-commerce activity, manage all relationships and collect and pay commissions on
sales generated, all at a cost that is lower than traditional online performance
marketing or advertising programs.
Commission Junction provides a Web-based application services solution that
tracks e-commerce activity in real-time and pays online content providers a
single, aggregate check each month. Commission Junction pays online content
sites when a customer takes a measurable action (request for information,
subscription or purchase). By signing on with Commission Junction the Company
will be working with an experienced team who will design, manage and monitor the
performance of the program. However, while discussions between the Company and
Commission Junction have taken place, there is no assurance that a formal
agreement will be consummated.
Marketing
The Company's marketing efforts and activities in its Interactive Online
Services business is expected to be conducted for its multiple brands through a
common infrastructure. The marketing goals of the Company's Interactive Online
Services business are to attract and retain members or users, as applicable, of
the online services and properties and to develop and differentiate the
Company's family of brands. To support member acquisition, the Company intends
to market its products and services through a broad array of programs and
strategies, including broadcast advertising campaigns, direct mail, magazine
inserts and advertisements, co-marketing, bundling agreements and alternate
media. The Company intends to also actively market its multiple brands through
traditional campaigns (broadcast television, radio and print publications), and
through more innovative means, such as through extensive online and offline
cross-promotion and co-branding with a wide variety of interactive services
partners.
The Company intends to utilize targeted or limited promotions and marketing
programs and pricing plans designed to appeal to particular groups of potential
users of its interactive online services and to distinguish and develop its
different brands. The Interactive Online Services business utilizes
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specialized retention programs designed to increase member and user loyalty and
satisfaction. These retention programs include regularly scheduled online events
and conferences; the regular addition of new content, features and software
programs; and online promotions of upcoming online events and new features. The
Company intends to also provide a variety of support mechanisms such as online
support and 24-hour telephone customer support services.
As an additional marketing tool and bonus to the Company's members, the Company
intends to give away a $1,000.00 cash prize every week. Members collect entries
into the Company sweepstakes giveaway for practically everything they do on the
site from searching the Web and reading the news to checking emails and tracking
stocks. The more the member uses the Company's site, the more entries they will
collect and the greater their chances of winning. Participation in this
sweepstakes will be free.
The Company Virtual ISP Direct Dial-Up Service
The Company's direct dial-up service will offer subscribers special pricing in
addition to the features listed below:
- Internet Connectivity
- Comprehensive user guide
- Personalized home page
- Over 900 dial-up access numbers nationwide
- E-mail accounts
- Help desk manned 24/7 by toll free number
- Personal Web space
- A global network comprised of more than 900 U.S local access points and
approximately 1,500 international local access points in more than 150
countries.
- High-speed dial access, all U.S. modems are v.90, 56 kbps and ISDN
available in 900 U.S. cities, ensuring reliable, fast response times
and quick access to the Internet around the clock.
- Global roaming service is included enabling you to offer seamless
connectivity from more than 150 countries.
The Company intends to price its services to be competitive in the
marketplace as follows:
- One time set-up fee per account $24.50
- Monthly fee per subscriber (150 hours of access) $19.95
- Additional cost per hour over 150 hours $ .50
Included in the Company's monthly subscription charge will be the following
features:
- Free browser ("OneClass/1Class")
- E-mail (your [email protected]) with 5 MB of storage
---------------
- E-mail forwarding
- Full internet access
- Personal web space with 5 MB of storage
According to Cahners, In-Stat Group reports that the amount of revenue produced
by ISPs in the US is expected to grow by 37% in 2000 -- from $23.7 billion in
1999 to $32.5 billion this year. The total number of ISPs should likewise
increase by 36% from 5,775 in 1999 to 7,785 by the end of this year.
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E-Mail Marketing
The Company intends to use the process of "member registration" and "data
mining" to gather valuable user demographic data, enabling E-mail marketing to
be significantly more efficient than nearly any other form of marketing.
According to marketer's Email Marketing Report, released in November 2000, total
spending on e-mail marketing in 2000 will be almost $1.1 billion. This figure is
expected to rise to over $4.5 billion by 2003. Email marketing includes ads,
sponsorships, promotions, announcements and customer relationship management,
and retention initiatives delivered via e-mail. Email advertising accounts for
roughly 46% of total spending for e-mail marketing. Starting from $496 million
in 2000, e-mail advertising spending is expected to reach over $2 billion in
2003.
In addition to advertising, e-mail marketing expenditures include outsourcing
solution providers, management software, list hosting software or services,
viral marketing vehicles (e.g., branded webmail), commerce services, tools and
technologies, and spending related to customer relationship e-mail, (sometimes
referred to as "retention e-mail"). eMarketer predicts the entire category will
grow from $242 million at the end of 1999 to $2.4 billion by the end of 2003.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal business, production of metal parts and tools, is a
capital intensive operation which requires periodic capital expenditures to
replace or upgrade manufacturing equipment as well as expenditures to maintain
existing equipment. To date, such expenditures have been principally financed by
cash flows from operations of the Company's operating subsidiaries. Significant
expenditures of the parent company include the servicing of debt related to the
acquisition of the Metrix Companies and ongoing general and administrative costs
incurred in connection with public reporting requirements and in investigating
new potential acquisition candidates in accordance with the Company's continuing
expansion plans. To date, such expenditures have been financed by equity capital
contributions and related party loans. These capital contributions and loans
have been adequate to permit the Company to carry on operations to date.
However, it will be necessary to finance operations over the coming year with
additional funds raised through the issuance of debt or equity securities.
On June 26, 1998, Polcorp acquired all of the issued and outstanding shares of
Metrix Tools, LLC ("MTL") and Metrix Metal, LLC ("MML") in exchange for notes
payable in the amounts of 430,000 Polish zlotys ($122,717 US dollars) and
930,000 Polish zlotys ($265,411 US dollars), respectively. These notes provide
for repayment in US Dollars based on the exchange rate at ING Bank S.A., Warsaw,
Poland. The notes are payable in four (4) equal installments commencing 90 days
after the date of the agreement. The balance of the installments were due 270,
450 and 630 days following the date of the agreement. Each installment includes
interest at the rate of 8% annually increased by the inflation ratio in Poland.
Failure to tender timely payment results in an interest charge of 20% annually.
This debt is secured by the stock of MTL and MML. As of the date of this report,
the Company has temporarily suspended the payments which were due in 1999 and
2000, during the negotiations to acquire Metrix, S.A., as more fully described
in Part I, Item I, above. While the Company is technically in default of its
obligations under the notes because it did not make the required payment, the
Company has not received any notice of default. The balance due on these notes
as of September 30, 2000 was $228,990.
The Company has $70,000 of notes payable to a stockholder. The notes arose from
advances made by the stockholder to the Company. The notes bear interest at
prime plus 5.25% to 6.0% and are due May 1999 through January 2000. The notes
are collateralized by the Company's accounts receivable
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and property and equipment, but are subordinated to other secured debt. The
Company is in the process of re-negotiating payment terms for the notes.
Management recognizes the need for additional operating capital to continue the
Company's existing manufacturing operations, to effect potential acquisitions in
the manufacturing industry and to carry out the Company's new business plan,
which may include acquisitions in a variety of industries. In response thereto,
it is expected that the Company will continue to seek out additional equity or
debt capital from individuals, venture capitalists and institutions. However, no
definitive agreement has been reached between the Company and any funding source
and there can be no assurance that the Company will be successful in this
regard. Failure of the Company to obtain additional capital in the future will
have a negative impact on management's ability to continue its efforts to expand
the Company's business and to generate profits from existing operations or
planned operations.
INFLATION
Although the operations of the Company are influenced by general economic
conditions, the Company does not believe that inflation had a material effect on
the results of operations during the nine-month period ended September 30, 2000.
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 - None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K -
(a) Exhibits
EX-27 Financial Data Schedule
(b) Reports on Form 8-K - The Company did not file a report on
Form 8-K during the three month period ended September 30,
2000. However, on November 1, 2000, the Company filed a report
on Form 8-K advising of the closing of an asset purchase, as
well as a change in control of the Company, which took place
on or about October 17, 2000. The details of this report are
summarized and outlined in "Part I, Item 2, Plan of Operation"
above herein.
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SIGNATURES
Pursuant to the requirements of Section 12 of the Securities and Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
NPS INTERNATIONAL CORPORATION
(Registrant)
Dated: November 17, 2000
By: Henry Val
--------------------------
Henry Val, President
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NPS INTERNATIONAL CORPORATION
EXHIBIT INDEX TO QUARTERLY REPORT ON FORM 10-QSB
FOR THE QUARTER ENDED SEPTEMBER 30, 2000
EXHIBITS Page No.
EX-27 Financial Data Schedule.....................................18
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