<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(X) QUARTERLY REPORT PURSUANT SECTION 13 OF 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 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
NEW WORLD PUBLISHING, INC.
(Exact name of small business as specified in its charter)
Colorado 84-1290152
---------------------- ----------------
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
11872 La Grange Ave., 2nd Floor
Los Angeles, CA 90025
(Address of principal executive offices)
(877) 733-1333
(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 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
---- ----
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable dated : June 30, 1999, 22,376,667 shares.
Transitional Small Business Disclosure Format (check one) :
Yes No X
---- ----
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NEW WORLD PUBLISHING, INC.
(FORMERLY KNOWN AS JLQ, INC.)
INDEX TO FORM 10-QSB QUARTERLY REPORT
TABLE OF CONTENTS
PART I - FINANCIAL STATEMENTS
ITEM PAGE
- ---- ----
Condensed Balance Sheets as of
June 30, 1999 (unaudited) and March 31, 1999 ............................... 1
Condensed Statements of Operations
for the three months ended June 30, 1999 (unaudited) and for the
period from July 20, 1998 (inception) to June 30, 1999 (unaudited).......... 2
Condensed Statements of Cash Flows
For the three months ended June 30, 1999 (unaudited) and for the
period from July 20, 1998 (inception) to June 30, 1999 (unaudited).......... 3
Notes to Condensed Financial Statements (unaudited) ........................ 4
Item 2 - Management's Discussion and
Analysis or Plan of Operation ............................................ 6
PART II - OTHER INFORMATION
Exhibits and Reports on Form 8-K
(A) Exhibits - None
(B) Reports on Form 8-K
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<TABLE>
NEW WORLD PUBLISHING, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1999 AND JUNE 30, 1999 (UNAUDITED)
=================================================================================================
<CAPTION>
ASSETS
March 31, June 30,
1999 1999
------------- -------------
(unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 127,654 $ 238,937
Note receivable 45,000 -
Due from related parties 9,383 35,975
Deferred financing costs 303,685 638,820
Prepaid services 59,375 62,790
Prepaid expenses and other current assets 17,918 38,700
------------- -------------
Total current assets 563,015 1,015,222
Furniture and equipment, net 10,682 24,103
------------- -------------
TOTAL ASSETS $ 573,697 $ 1,039,325
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LIABILITIES AND SHAREHOLDERS' EQUITY
March 31, June 30,
1999 1999
------------- -------------
(unaudited)
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 50,923 $ 46,592
Accrued expenses 27,577 21,201
Notes payable 370,000 370,000
------------- -------------
Total current liabilities 448,500 437,793
Convertible promissory notes - 500,000
------------- -------------
Total liabilities 448,500 937,793
------------- -------------
Commitments and contingencies
SHAREHOLDERS' EQUITY
Preferred stock, no par value
10,000,000 shares authorized
1,072,505 and 0 shares (unaudited) issued and
outstanding 742,550 -
Common stock, $0.0001 par value
100,000,000 shares authorized
20,743,258 and 22,376,667 (unaudited) shares issued
and outstanding 2,074 2,237
Additional paid-in capital 1,069,795 2,875,682
Deficit accumulated during the development stage (1,689,222) (2,776,387)
------------- -------------
Total shareholders' equity 125,197 101,532
------------- -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 573,697 $ 1,039,325
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
1
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NEW WORLD PUBLISHING, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 1999 (UNAUDITED) AND
FOR THE PERIOD FROM JULY 20, 1998 (INCEPTION) TO JUNE 30, 1999 (UNAUDITED)
================================================================================
For the For the
Three Period from
Months July 20, 1998
Ended (Inception)
June 30, to June 30,
1999 1999
------------- -------------
(unaudited) (unaudited)
OPERATING EXPENSES
General and administrative $ 698,999 $ 1,948,387
Consulting - related parties 120,000 313,150
------------- -------------
Total operating expenses 818,999 2,261,537
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LOSS FROM OPERATIONS (818,999) (2,261,537)
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OTHER INCOME (EXPENSE)
Interest expense (270,680) (518,056)
Interest income 2,514 3,206
------------- -------------
Total other income (expense) (268,166) (514,850)
------------- -------------
NET LOSS $ (1,087,165) $ (2,776,387)
============= =============
BASIC LOSS PER SHARE $ (0.05) $ (0.14)
============= =============
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING 21,519,678 20,166,620
============= =============
The accompanying notes are an integral part of these financial statements.
2
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<TABLE>
NEW WORLD PUBLISHING, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED JUNE 30, 1999 (UNAUDITED) AND
FOR THE PERIOD FROM JULY 20, 1998 (INCEPTION) TO JUNE 30, 1999 (UNAUDITED)
=============================================================================================================
<CAPTION>
For the For the
Three Period from
Months July 20, 1998
Ended (Inception)
June 30, to June 30,
1999 1999
------------- -------------
(unaudited) (unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (1,087,165) $ (2,776,387)
Adjustments to reconcile net loss to net cash
used in operating activities
Depreciation 2,949 9,583
Amortization 141,740 365,680
Interest charges on convertible promissory notes 137,500 137,500
Issuance of stock for services rendered - 125,000
Issuance of options for services rendered 35,000 499,975
(Increase) decrease in
Deferred financing costs (50,000) (87,000)
Prepaid services - (75,000)
Prepaid expenses (33,572) (51,490)
Increase (decrease) in
Accounts payable (4,331) 46,592
Accrued expenses (6,376) 21,201
------------- -------------
Net cash used in operating activities (864,255) (1,784,346)
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of furniture and equipment (16,370) (33,686)
Disbursement on note receivable - (45,000)
Repayment of note receivable 45,000 45,000
Repayments from related parties 6,894 6,894
Payments to related parties (33,486) (35,975)
------------- -------------
Net cash used in investing activities 2,038 (62,767)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable - 370,000
Proceeds from convertible promissory notes 500,000 500,000
Proceeds from preferred stock, net 473,500 1,216,050
------------- -------------
Net cash provided by financing activities 973,500 2,086,050
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</TABLE>
The accompanying notes are an integral part of these financial statements.
3
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<TABLE>
NEW WORLD PUBLISHING, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE THREE MONTHS ENDED JUNE 30, 1999 (UNAUDITED) AND
FOR THE PERIOD FROM JULY 20, 1998 (INCEPTION) TO JUNE 30, 1999 (UNAUDITED)
=============================================================================================================
<CAPTION>
For the For the
Three Period from
Months July 20, 1998
Ended (Inception)
June 30, to June 30,
1999 1999
------------- -------------
(unaudited) (unaudited)
<S> <C> <C>
Net increase in cash and cash equivalents $ 111,283 $ 238,937
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CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 127,654 -
------------- -------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 238,937 $ 238,937
============= =============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
INTEREST PAID $ 12,250 $ 66,797
============= =============
</TABLE>
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
During the period from July 20, 1998 (inception) to June 30, 1999, the Company
issued 1,113,688 shares (unaudited) of common stock valued at $480,000
(unaudited) to the holders of the notes payable as additional financing costs.
During the period form July 20, 1998 (inception) to June 30, 1999, the Company
issued 174,014 shares of common stock (unaudited) valued at $75,000 to a third
party for services rendered in connection with the issuance of the preferred
stock and 116,009 shares of common stock (unaudited) valued at $50,000 to a
third party for services rendered.
During the period form July 20, 1998 (inception) to June 30, 1999, the Company
issued 15,994,648 shares of common stock (unaudited) valued at $6,894 to
founders of the Company in exchange for notes receivable. These notes were
repaid prior to June 30, 1999 (unaudited).
The accompanying notes are an integral part of these financial statements.
4
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NEW WORLD PUBLISHING, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999 (UNAUDITED)
================================================================================
NOTE 1 - ORGANIZATION AND BUSINESS
New World Publishing, Inc. ("New World"), a Colorado publicly-traded
corporation, is in the design and development stage of becoming an
Internet service provider that will offer local dial-up Internet access
nationwide to 81 cities through the use of its network of 96 points of
presence. New World also plans to develop, market, and operate Internet
communities or vertical portals. New World will acquire subscribers
through the use of television advertising, Internet advertising, direct
mail, and telemarketing campaigns. New World'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. New World is also planning to use direct response television
marketing techniques, combined with toll-free interactive audio text
services to create monthly recurring membership programs. The primary
revenue-producing products from such membership programs include club
membership fees, telecommunication products and other club-related
services and products.
Communications Television, Inc. ("CTV") was formed under the laws of
California on July 20, 1998. On May 18, 1999, New World entered into an
Agreement and Plan of Reorganization whereby it acquired all of the
outstanding common stock of CTV in exchange for an aggregate of
19,020,167 shares of newly issued common stock. 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 New World have been included with those of the CTV from
the acquisition date.
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. Since this was the
first year of operations for CTV, it has selected March 31 as its
fiscal year end.
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 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 Form 8-K/A registration
statement, as amended, for the period from July 20, 1998 (inception) to
March 31, 1999. The results of operations for the three months ended
June 30, 1999 are not necessarily indicative of the results that may be
expected for the year ended March 31, 2000.
5
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NEW WORLD PUBLISHING, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999 (UNAUDITED)
================================================================================
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Loss per Share
--------------
For the period from July 20, 1998 (inception) to March 31, 1999, the
Company adopted 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.
6
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ITEM 2. Managements 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 1995 ACT 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
New World Publishing, Inc. (the "Company"), a Colorado corporation, is
in the design and development stage of becoming an Internet service
provider that will offer local dial-up Internet access nationwide to 81
cities through the use of its network of 96 points of presence. The
Company also plans to develop, market, and operate Internet communities
or vertical portals. The Company intends to acquire subscribers through
the use of television advertising, Internet advertising, direct mail,
and telemarketing campaigns. The Company'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 is also planning to use direct response
television marketing techniques, combined with toll-free interactive
audio text services to create monthly recurring membership programs.
The primary revenue-producing products from such membership programs
include club membership fees, telecommunication products and other
club-related services and products.
Results of Operations
The Company has been in the developmental stage since its inception.
The Company incurred net losses of $1,087,165 (unaudited) and
$2,776,387 (unaudited), during the three months ended June 30, 1999 and
the period from July 20, 1998 (inception)to June 30, 1999,
respectively. The Company had no revenues during the three months'
period ended June 30, 1999. 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 $238,937
(unaudited) in cash and cash equivalents. The Company plans to raise
funds for working capital and development of the Company's operations.
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.
7
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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 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/A was filed for Item. 7 and Item 8.
8
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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.
NEW WORLD PUBLISHING, INC.
(Registrant)
Date: August 18, 1999 /S/David Baeza
----------------------------------
David Baeza, CEO and President
Date: August 18, 1999 /S/ William Cooper
----------------------------------
William Cooper,
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-START> APR-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 238,937
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,015,222
<PP&E> 24,103
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,039,325
<CURRENT-LIABILITIES> 437,793
<BONDS> 0
0
0
<COMMON> 2,237
<OTHER-SE> 99,295
<TOTAL-LIABILITY-AND-EQUITY> 1,039,325
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 818,999
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 270,680
<INCOME-PRETAX> (1,087,165)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,087,165)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,087,165)
<EPS-BASIC> (.05)
<EPS-DILUTED> (.05)
</TABLE>
