<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(Mark One)
(X) QUARTERLY REPORT PURSUANT SECTION 13 OF 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999.
( ) TRANSITION REPORT PURSUANT SECTION 13 OF 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission file number 0-23365
SONICPORT.COM, INC.
(Exact name of small business as specified in its charter)
Colorado 84-1290152
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1641 20th Street, Santa Monica, CA 90404
(Address of principal executive offices)
(310) 828-1999
(Issuer's telephone number)
Former name: New World Publishing, Inc.
---------------------------------------
Former address: 11872 La Grange Avenue, 2nd Floor, Los Angeles, CA 90025
------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities 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 ( )
APPLICABLE ONLY TO CORPORATE ISSUERS
------------------------------------
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date : November 19, 1999, 23,633,774
shares.
Transitional Small Business Disclosure Format (check one) : Yes ( ) No (X)
<PAGE>
SONICPORT.COM, INC.
(Formerly New World Publishing, Inc.)
INDEX TO FORM 10-QSB QUARTERLY REPORT
TABLE OF CONTENTS
Page
Number
------
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (Unaudited):
Consolidated Balance Sheet as of September 30, 1999........... 1
Consolidated Statement of Operations for the three months
ended September 30, 1999, for the period from July 20, 1998
(inception) to September 30, 1998, and for the period from
July 20, 1998 (inception) to September 30, 1999............... 2
Consolidated Statement of Operations for the six months ended
September 30, 1999, for the period from July 20, 1998 (inception)
to September 30, 1998, and for the period from July 20, 1998
(inception) to September 30, 1999............................. 3
Consolidated Statement of Cash Flows for the six months ended
September 30, 1999, for the period from July 20, 1998 (inception)
to September 30, 1998, and for the period from July 20, 1998
(inception) to September 30, 1999............................. 4
Notes to Consolidated Financial Statements.................... 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION................................. 12
PART II - OTHER INFORMATION................................................ 14
Exhibits and Reports on Form 8-K
(A) Exhibits - None
(B) Reports on Form 8-K
<PAGE>
SONICPORT.COM, INC.
(Formerly New World Publishing, Inc.)
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEET (UNAUDITED)
SEPTEMBER 30, 1999
September 30,
1999
----
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 23,745
Due from related parties 42,633
Deferred financing costs 137,835
Prepaid services 230,625
Prepaid expenses and other current assets 77,168
------------
Total current assets 512,006
Furniture, fixtures and equipment, net 1,230,043
------------
$ 1,742,049
============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 77,610
Accrued expenses 31,155
------------
Total current liabilities 108,765
LONG TERM DEBT
Notes payable 360,000
Convertible promissory notes 1,225,000
------------
Total liabilities 1,693,765
------------
Commitments and contingencies
SHAREHOLDERS' EQUITY
Common stock, $0.0001 par value
100,000,000 shares authorized
23,633,774 shares issued and outstanding 2,363
Common stock committed, $0.0001 par value,
300,000 shares committed but not yet issued 1,125,000
Additional paid-in capital 4,411,117
Deficit accumulated during the development stage (5,490,196)
------------
Total shareholders' equity 48,284
------------
$ 1,742,049
============
The accompanying notes are an integral part of these financial statements.
1
<PAGE>
<TABLE>
SONICPORT.COM, INC.
(Formerly New World Publishing, Inc.)
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1999 AND
FOR THE PERIOD FROM JULY 20, 1998 (INCEPTION) TO SEPTEMBER 30, 1998
<CAPTION>
For the For the
For the period from period from
three months July 20,1998 July 20,1998
ended (inception) to (inception) to
September 30, September 30, September 30,
1999 1998 1999
---- ---- ----
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C>
SALES $ 1,220 $ - $ 1,766
------------- ------------- -------------
OPERATING EXPENSES
General and administrative 1,347,094 296,119 3,296,387
Consulting - related parties - 37,950 313,150
------------- ------------- -------------
Total operating expenses 1,347,094 334,069 3,609,537
------------- ------------- -------------
LOSS FROM OPERATIONS (1,345,874) (334,069) (3,607,771)
------------- ------------- -------------
OTHER INCOME (EXPENSE)
Interest expense (1,368,692) (27,947) (1,886,748)
Interest income 1,117 - 4,323
------------- ------------- -------------
Total other income (expense) (1,367,575) (27,947) (1,882,425)
------------- ------------- -------------
NET LOSS $ (2,713,449) $ (362,016) $ (5,490,196)
============= ============= =============
BASIC LOSS PER SHARE $ (.12) $ (.02) $ (.27)
============= ============= =============
WEIGHTED-AVERAGE COMMON
SHARES OUTSTANDING 22,814,571 18,672,359 20,716,151
============= ============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
<TABLE>
SONICPORT.COM, INC.
(Formerly New World Publishing, Inc.)
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1999 AND
FOR THE PERIOD FROM JULY 20, 1998 (INCEPTION) TO SEPTEMBER 30, 1998
<CAPTION>
For the For the
For the period from period from
six months July 20,1998 July 20,1998
ended (inception) to (inception) to
September 30, September 30, September 30,
1999 1998 1999
---- ---- ----
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C>
SALES $ 1,766 $ - $ 1,766
------------- ------------- -------------
OPERATING EXPENSES
General and administrative 2,156,999 296,119 3,296,387
Consulting - related parties 10,000 37,950 313,150
------------- ------------- -------------
Total operating expenses 2,166,999 334,069 3,609,537
------------- ------------- -------------
LOSS FROM OPERATIONS (2,165,233) (334,069) (3,607,771)
------------- ------------- -------------
OTHER INCOME (EXPENSE)
Interest expense (1,639,372) (27,947) (1,886,748)
Interest income 3,631 - 4,323
------------- ------------- -------------
Total other income (expense) (1,635,741) (27,947) (1,882,425)
------------- ------------- -------------
NET LOSS $ (3,800,974) $ (362,016) $ (5,490,196)
============= ============= =============
BASIC LOSS PER SHARE $ (.17) $ (.02) $ (.27)
============= ============= =============
WEIGHTED-AVERAGE COMMON
SHARES OUTSTANDING 22,170,661 18,672,359 20,716,151
============= ============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
<TABLE>
SONICPORT.COM, INC.
(Formerly New World Publishing, Inc.)
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1999 AND
FOR THE PERIOD FROM JULY 20, 1998 (INCEPTION) TO SEPTEMBER 30, 1998
<CAPTION>
For the For the
For the period from period from
six months July 20,1998 July 20,1998
ended (inception) to (inception) to
September 30, September 30, September 30,
1999 1998 1999
---- ---- ----
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (3,800,974) $ (362,016) $ (5,490,196)
Adjustments to reconcile net loss to net
cash used in operating activities
Depreciation 73,293 79,927
Amortization 309,600 20,605 533,540
Interest charges on convertible promissory notes 1,258,220 1,258,220
Issuance of stock for services rendered 140,000 75,000 265,000
Issuance of options for services rendered 458,563 923,538
Finance charge on notes payable 73,778 73,778
(Increase) decrease in
Accounts receivable (28,026)
Deferred financing costs (120,000) (21,500) (157,000)
Prepaid services (75,000)
Prepaid expenses and other (59,250) (11,000) (77,168)
Increase (decrease) in
Accounts payable 26,687 60,848 77,610
Accrued expenses 3,578 7,757 31,155
------------- ------------- -------------
Net cash used in operating activities (1,636,505) (258,332) (2,556,596)
------------- ------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of furniture and equipment (167,654) (17,316) (184,970)
Repayments from related parties 6,894 (1,505) (40,595)
Repayment of note receivable 45,000 45,000
Payments to related parties (40,144) - (40,144)
------------- ------------- -------------
Net cash used in investing activities (155,904) (18,821) (220,709)
------------- ------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on notes payable (10,000)
Proceeds from notes payable 245,300 360,000
Proceeds from convertible promissory notes 1,225,000 1,225,000
Proceeds from preferred stock, net 473,500 39,810 1,216,050
------------- ------------- -------------
Net cash provided by financing activities 1,688,500 285,110 2,801,050
------------- ------------- -------------
Net increase in cash and cash equivalents (103,909) 7,957 23,745
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 127,654 - -
------------- ------------- -------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 23,745 $ 7,957 $ 23,745
============= ============= =============
INTEREST PAID $ 15,583 $ 27,947 $ $ 70,124
============= ============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
SONICPORT.COM, INC.
(Formerly New World Publishing, Inc.)
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Continued)
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1998 AND
FOR THE PERIOD FROM JULY 20, 1998 (INCEPTION) TO SEPTEMBER 30, 1999
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
SUMMARY OF NON-CASH INVESTING AND FINANCING ACTIVITIES
During the period from July 20, 1998 (inception) to September 30, 1998, the
Company issued 607,408 shares of its common stock valued at $260,000 to the
holders of the notes payable as additional financing costs. During the six
months ended September 30, 1999, the Company issued to the note holders an
additional 11,601 shares valued at $5,000.
During the period from July 20, 1998 to September 30, 1998, the Company issued
174,014 shares of common stock valued at $75,000 to third parties for services
rendered in connection with the issuance of preferred stock, During the six
months ended September 30, 1999, the Company issued 340,000 shares of common
stock valued at $330,000 to third parties for other services rendered.
During the period form July 20, 1998 (inception) to March 31, 1999, the Company
issued 15,994,648 shares of common stock valued at $6,894 to founders of the
Company in exchange for notes receivable. These notes were repaid prior to
September 30, 1999.
During the six months ended September 30, 1999, convertible promissory notes
payable totaling $150,000 were exchanged for 46,940 shares of the Company's
common stock.
During the three months ended September 30, 1999, the Company purchased 96
Points of Presence in exchange for 300,000 restricted shares of the Company's
common stock valued at $1,125,000.
5
<PAGE>
SONICPORT.COM, INC.
(Formerly New World Publishing, Inc.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 1999
NOTE 1 - ORGANIZATION AND BUSINESS
Sonicport is in the design and development stage of becoming the next generation
of Internet service, a hybrid of demographic specific portals and national
Internet access. Subscribers will be acquired through aggressive direct response
television, direct mail, telemarketing and Internet advertising. The Company
plans to offer Internet access to 75% of the U.S. population in 81 major U.S.
cities, including New York, Los Angeles and Chicago. The Company believes that
the Internet's expected growth (five times as many users in the next four years,
studies suggest) will fuel demand for value-added services that link together
users with like-minded interests. The Company intends to bring those users
together in "virtual communities" that offer products, services and information
specific to their interests. Sonicport's revenue streams will be generated from
monthly subscriber fees, monthly web-hosting service fees, and portal
advertising fees as well as fees charged for enhanced services.
Communications Television, Inc. ("CTV") was formed under the laws of California
on July 20, 1998. Effective May 18, 1999, CTV and Sonicport.com, Inc.
(previously known as New World Publishing, Inc., a Colorado publicly traded
corporation (collectively, the "Company" or "Sonicport"), entered into an
Agreement and Plan of Reorganization, whereby all of the outstanding shares of
common stock of CTV were exchanged for an aggregate of 19,020,167 shares of New
World Publishing, Inc. ("New World"). For accounting purposes, the transaction
has been treated as a recapitalization of CTV, with CTV as the accounting
acquirer (reverse acquisition), and has been accounted for in a manner similar
to a pooling of interests. The operations of Sonicport have been included with
those of the CTV from the acquisition date. On October 12, 1999, a special
meeting of the stockholders was held and the following actions were approved by
the stockholders: (i) the change of the Company's name to "Sonicport.com, Inc."
from New World Publishing, Inc., effective October 18, 1999, (ii) adoption of
the 1999 Company's Incentive Stock Option Plan, (iii) the change of the
Company's state of incorporation to Nevada from Colorado, and (iv) the change in
the Company's firm of independent certified public accountants to Singer, Lewak,
Greenbaum & Goldstein LLP.
New World was incorporated in Colorado on December 28, 1994. New World had
minimal assets and liabilities at the date of the acquisition and did not have
significant operations prior to the acquisition. Therefore, no pro forma
information is presented.
Effective July 23, 1999, the Company purchased 96 Points of Presence (POP's)
that will allow it to become an Internet service provider in 81 cities in the
United States. The Company issued 50,000 shares of restricted common stock with
piggyback registration rights and 250,000 restricted shares to purchase the
POP's. The shares issued were valued at $1,125,000 using the closing price of
the Company's common stock on July 23, 1999, the closing date of the
acquisition. The closing price was $5.00 per share, discounted by 25% to reflect
the issuance of restricted stock and the fact that the Company's stock is thinly
traded.
6
<PAGE>
SONICPORT.COM, INC.
(Formerly New World Publishing, Inc.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
SEPTEMBER 30, 1999
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
- ---------------------
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-QSB and Regulation S-X. Accordingly, they do
not include all the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all normal, recurring adjustments considered necessary for a fair
presentation have been included. The financial statements should be read in
conjunction with the audited financial statements and notes thereto included in
the Company's report on Form 8-K/A for the period from July 20, 1998 (inception)
to June 30, 1999. The results of operations for the three and six month periods
ended September 30, 1999 are not necessarily indicative of the results that may
be expected for the year ended March 31, 2000.
Loss per Share
- --------------
The Company calculates loss per share in accordance with Statement of Financial
Accounting Standards ("SFAS") No. 128, "Earnings per Share". Basic loss per
share is computed by dividing the net loss available to common shareholders by
the weighted-average number of common shares outstanding. Diluted loss per share
is computed similar to basic loss per share except that the denominator is
increased to include the number of additional common shares that would have been
outstanding if the potential common shares had been issued and if the additional
common shares were dilutive. Diluted loss per share is not presented because
common stock equivalents are anti-dilutive.
Income Taxes
- ------------
The Company accounts for income taxes under the asset and liability method of
accounting. Under this method, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date. A valuation
allowance is required when it is less likely than not that the Company will be
able to realize all or a portion of its deferred tax assets.
7
<PAGE>
SONICPORT.COM, INC.
(Formerly New World Publishing, Inc.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
SEPTEMBER 30, 1999
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Principles of Consolidation
- ---------------------------
The consolidated financial statements include the accounts of the Sonicport and
its wholly-owned subsidiary, CTV (collectively, the "Company"). All intercompany
accounts and transactions have been eliminated.
Furniture, Fixtures and Equipment
- ---------------------------------
Furniture, fixtures and equipment are recorded at cost, less accumulated
depreciation and amortization. Depreciation and amortization are provided using
the straight-line method over estimated useful lives as follows:
Furniture and fixtures 5 years
Office equipment 5 to 7 years
Leasehold improvements Lesser of initial lease period
or useful life of asset
Computer equipment 3 years
Maintenance and minor replacements are charged to expense as incurred. Gains and
losses on disposals are included in the results of operations. Leasehold
improvements are amortized over the lease period of the useful life of the
asset, whichever is shorter.
NOTE 3 - FURNITURE, FIXTURES AND EQUIPMENT
Furniture, fixtures and equipment consisted of the following:
September 30,
1999
----
(Unaudited)
Furniture and fixtures $ 55,125
Office equipment 57,899
Computer equipment 1,125,000
Leasehold improvements 71,946
------------
1,309,970
Less accumulated depreciation and amortization (79,927)
-------------
Total $ 1,230,043
============
8
<PAGE>
SONICPORT.COM, INC.
(Formerly New World Publishing, Inc.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
SEPTEMBER 30, 1999
NOTE 4 - NOTES PAYABLE
Notes payable consisted of the following:
September 30,
1999
----
(Unaudited)
Note payable, interest at 10%, unsecured, due
October 31, 1999 $ 360,000
Less current portion (360,000)
-------------
Long-term portion $ -
=============
On September 28, 1999, the due date of the notes was extended to April
3, 2000. As part of the extension of the due date, the note holders
were granted 74,000 warrants for the purchase of restricted shares of
the Company's common stock. The warrants have an exercise price of
$2.94, vest immediately, and expire on October 1, 2004. The Company
recorded a finance charge of $73,778, representing the difference
between the Company's common stock price on the extension date of
$3.937 and the exercise price of the warrants.
9
<PAGE>
SONICPORT.COM, INC.
(Formerly New World Publishing, Inc.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
SEPTEMBER 30, 1999
NOTE 5 - CONVERTIBLE PROMISSORY NOTES
On May 31, 1999, the Company entered into a Subscription Agreement for ten, 10%
Convertible Promissory Notes (the "Notes") for $50,000 each. The Company
incurred offering costs of $50,000 in connection with the issuance of the Notes.
Interest is due on each Note on January 1 and July 1. Principal and any unpaid
interest are due on May 31, 2001 if the Notes have not been converted prior to
such date by either party to the Notes. The holders of the Notes have the option
to convert the Notes at the earlier of the effective date of a registration
statement or 120 days from the date of the Notes. The Notes are convertible at
the lesser of $2.50 or 75% of the average closing bid price of the Company's
common stock for the five trading days prior to conversion.
On July 8, 1999 and August 24, 1999, the Company entered into Subscription
Agreements for 10% Convertible Promissory Notes (the "Notes") for $275,000 and
$250,000, respectively. The Company incurred offering costs of $52,500 in
connection with the issuance of the Notes. Interest is due on each Note on
January 1 and July 1, respectively, if the Notes have not been converted prior
to such date by either party to the Notes. The holders of the Notes have the
option to convert the Notes at anytime after the closing date of the Notes. The
Notes are convertible at the lesser of $2.50 or 75% of the average closing bid
price of the Company's common stock for the five trading days prior to
conversion.
On August 25, 1999, the Company entered into Subscription Agreements for eight,
10% Convertible Promissory Notes (the "Notes") for $25,000 each. The Company
incurred offering costs of $17,500 in connection with the issuance of the Notes.
Interest is due on each Note on March 1 and September 1. Principal and any
unpaid interest are due on August 31, 2001 if the Notes have not been converted
prior to such date by either party to the Notes. The holders of the Notes have
the option to convert the Notes at anytime after the closing date of the Notes.
The Notes are convertible at the lesser of $3.25 or 75% of the average closing
bid price of the Company's common stock for the five trading days prior to
conversion.
In accordance with generally accepted accounting principles, the difference
between the conversion prices and the Company's stock price on the date of
issuance of the Notes is considered to be interest expense and is recognized in
the statement of operations during the period from the issuance of the debt to
the time at which the debt first becomes convertible. In connection with the
issuance of the Notes, the Company recorded deferred financing costs of
$1,258,221 as a current asset and interest expense of $1,258,221 in the
accompanying statement of operations for the six months ended September 30,
1999.
NOTE 6 - SHAREHOLDERS' EQUITY
Stock Options
- -------------
During the six months ended September 30, 1999, the Company granted 1,235,498
non-qualified stock options to certain employees and non-employees that may be
exercised at prices ranging between $0.50 and $10.00 per share. These options
vest over periods ranging from the date of grant to three years from the date of
grant and expire five years from the date of grant.
10
<PAGE>
SONICPORT.COM, INC.
(Formerly New World Publishing, Inc.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
SEPTEMBER 30, 1999
NOTE 7 - SUBSEQUENT EVENTS
Subsequent to September 30, 1999, the Company granted 115,500 non-qualified
stock options to certain employees and non-employees that may be exercised at
prices ranging between $4.07 and $4.44 per share. These options vest immediately
upon the date of grant.
Subsequent to September 30, 1999, the Company issued 243,750 restricted shares
of its common stock valued at $975,000, as payment for advertising through
February of 2001.
11
<PAGE>
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
PRELIMINARY NOTE REGARDING FORWARD-LOOKING STATEMENTS: ALL FORWARD-LOOKING
STATEMENTS CONTAINED HEREIN ARE DEEMED BY THE COMPANY TO BE COVERED BY AND TO
QUALIFY FOR THE SAFE HARBOR PROTECTION PROVIDED BY THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995. THE SHAREHOLDERS AND PROSPECTIVE SHAREHOLDERS
SHOULD UNDERSTAND THAT SEVERAL FACTORS GOVERN WHETHER ANY FORWARD - LOOKING
STATEMENT CONTAINED HEREIN WILL BE OR CAN BE ACHIEVED. ANY ONE OF THOSE FACTORS
COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE PROJECTED HEREIN.
THESE FORWARD - LOOKING STATEMENTS INCLUDE PLANS AND OBJECTIVES OF MANAGEMENT
FOR FUTURE OPERATIONS, INCLUDING PLANS AND OBJECTIVES RELATING TO THE PRODUCTS
AND THE FUTURE ECONOMIC PERFORMANCE OF THE COMPANY. ASSUMPTIONS RELATING TO THE
FOREGOING INVOLVE JUDGMENTS WITH RESPECT TO, AMONG OTHER THINGS, FUTURE
ECONOMIC, COMPETITIVE AND MARKET CONDITIONS, FUTURE BUSINESS DECISIONS, AND THE
TIME AND MONEY REQUIRED TO SUCCESSFULLY COMPLETE DEVELOPMENT PROJECTS, ALL OF
WHICH ARE DIFFICULT OR IMPOSSIBLE TO PREDICT ACCURATELY AND MANY OF WHICH ARE
BEYOND THE CONTROL OF THE COMPANY. ALTHOUGH THE COMPANY BELIEVES THAT THE
ASSUMPTIONS UNDERLYING THE FORWARD - LOOKING STATEMENTS CONTAINED HEREIN ARE
REASONABLE, ANY OF THOSE ASSUMPTIONS COULD PROVE INACCURATE AND, THEREFORE,
THERE CAN BE NO ASSURANCE THAT THE RESULTS CONTEMPLATED IN ANY OF THE FORWARD -
LOOKING STATEMENTS CONTAINED HEREIN WILL BE REALIZED. BASED ON ACTUAL EXPERIENCE
AND BUSINESS DEVELOPMENT, THE COMPANY MAY ALTER ITS MARKETING, CAPITAL
EXPENDITURE PLANS OR OTHER BUDGETS, WHICH MAY IN TURN AFFECT THE COMPANY'S
RESULTS OF OPERATIONS. IN LIGHT OF THE SIGNIFICANT UNCERTAINTIES INHERENT IN THE
FORWARD LOOKING STATEMENTS INCLUDED THEREIN, THE INCLUSION OF ANY SUCH STATEMENT
SHOULD NOT BE REGARDED AS A REPRESENTATION BY THE COMPANY OR ANY OTHER PERSON
THAT THE OBJECTIVES OR PLANS OF THE COMPANY WILL BE ACHIEVED.
Overview of the Company's Business
Sonicport.com, Inc., a Colorado corporation (formerly New World Publishing,
Inc.) is in the design and development stage of becoming the next generation of
Internet service, a hybrid of demographic specific portals and national Internet
access. Subscribers will be acquired through aggressive direct response
television, direct mail, telemarketing and Internet advertising. The Company
plans to offer Internet access to 75% of the U.S. population in 81 major U.S.
cities, including New York, Los Angeles and Chicago. The Company believes that
the Internet's expected growth (five times as many users in the next four years,
studies suggest) will fuel demand for value-added services that link together
users with like-minded interests. The Company intends to bring those users
together in "virtual communities" that offer products, services and information
specific to their interests. Sonicport's revenue streams will be generated from
monthly subscriber fees, monthly web-hosting service fees, and portal
advertising fees as well as fees charged for enhanced services. The Company will
be able to offer these services via regular dial-up or DSL technology, where
available, via strategic partnerships that exist with DSL technology companies.
The Company will focus on three primary areas in developing and deploying its
product for consumers: 1) setting up and maintaining an ISP network, 2)
acquiring and retaining subscribers, and 3) building demographically-targeted
VIRTUAL PORTAL(1) sites that will attract and engage users.
- ----------
(1) VIRTUAL PORTAL - A niche-oriented Web site that offers a variety of
information and services characteristic of a portal but targeted to a
specific subject area or interest.
12
<PAGE>
ITEM 2. Management Discussion and Analysis of Financial Condition
and Results of Operations (Continued)
Results of Operations
The Company has been in the developmental stage since its inception. The Company
incurred net losses of $2,713,447 and $3,800,974 during the three months and six
months ended September 30, 1999, respectively, and incurred a net loss of
$362,016 for the period from July 20, 1998 to September 30, 1998. The losses are
primarily the result of the Company's incurring interest expense, development
costs and general and administrative expenses, with only nominal revenue
realized during the periods. Development costs include the cost of developing
media advertising programs, and general and administrative costs include
compensation and benefits, professional fees, and other. The Company had
revenues of $1,220 and $1,766 during the three and six months ended September
30, 1999, respectively. The Company is seeking to raise funds to fully implement
its business plan.
Liquidity and Capital Resources
As of the end of the reporting period, the Company had $23,745 in cash and cash
equivalents. The Company plans to raise funds for working capital and
development of the Company's operations. If the Company is unsuccessful in
obtaining such funds, the Company may be unable to continue in operation.
From the inception of the Company, July 20, 1998, through September 30, 1999,
net cash used in operations of $2,556,596, and net cash used in investing
activities of $220,709 were financed primarily by the issuance of $360,000 in
notes payable, $1,225,000 in convertible notes payable and $ 1,216,050 in
preferred stock. During the six months ended September 30, 1999, net cash used
in operations of $1,636,505, and net cash used in investing activities of
$155,904 were financed primarily by the issuance of $1,225,000 in convertible
notes payable and $ 473,500 in preferred stock
Year 2000 Compliance
The Company is conducting a comprehensive review of its computer systems to
identify the systems that could be affected by the Year 2000 issue and is
developing an implementation plan to resolve the issue.
The issue is whether computer systems will properly recognize date-sensitive
information when the year changes to 2000. Systems that do not properly
recognize such information could generate erroneous data or cause a system to
fail. The Company is dependent on computer processing in the conduct of its
business activities.
Based on the review of the computer systems, management does not believe the
cost of implementation will be material to the Company's financial position and
results of operations.
13
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings.
No legal proceedings of a material nature to which the Company is a party were
pending during the reporting period, and the Company had minimal cash and cash
equivalents. There was no significant change in working capital during this
fiscal year.
ITEM 2. Changes in Securities. None.
ITEM 3. Defaults upon Senior Securities. None.
ITEM 4. Submission of Matter to a Vote of Security Holders. None.
ITEM 5. Other Information. None.
ITEM 6. Exhibits and Reports on Form 8-K. Form 8-K, Item 4; Form 8-K/A, Item 7.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Exchange Act, the registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
SONICPORT.COM, INC.
(Registrant)
Date: November 18, 1999 /S/ David Baeza
---------------------------
David Baeza, CEO and
President
Date: November 18, 1999 /S/ William Cooper
---------------------------
William Cooper,
Chief Financial Officer
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's financial statements for the six months ended September 30, 1999 and
for the period from May 1, 1998 (inception) to September 30, 1998 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 5-MOS
<FISCAL-YEAR-END> MAR-31-2000 MAR-31-1999
<PERIOD-START> APR-01-1999 MAY-01-1998
<PERIOD-END> SEP-30-1999 SEP-30-1998
<CASH> 23,745 28,026
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 512,016 316,277
<PP&E> 1,307,970 17,316
<DEPRECIATION> 79,927 0
<TOTAL-ASSETS> 1,742,049 333,593
<CURRENT-LIABILITIES> 108,765 68,605
<BONDS> 0 0
0 0
0 125,500
<COMMON> 2,363 1,916
<OTHER-SE> 45,921 (107,728)
<TOTAL-LIABILITY-AND-EQUITY> 1,742,049 333,593
<SALES> 1,766 0
<TOTAL-REVENUES> 1,766 0
<CGS> 0 0
<TOTAL-COSTS> 2,161,602 334,069
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 1,639,372 27,747
<INCOME-PRETAX> (3,800,974) (362,016)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (3,800,974) (362,016)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (3,800,974) (362,016)
<EPS-BASIC> (0.17) (0.02)
<EPS-DILUTED> (0.17) (0.02)
</TABLE>
