<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 June 30, 2000
( ) 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)
Nevada 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, 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 June 30, 2000: 26,094,735 shares of common stock, $0.0001 par
value.
Transitional Small Business Disclosure Format (check one) : Yes ( ) No (X)
<PAGE>
SONICPORT.COM, INC.
AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED
JUNE 30, 2000 AND 1999 (UNAUDITED)
<PAGE>
SONICPORT.COM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONTENTS
JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
PART I
Page
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheet 1 - 2
Consolidated Statements of Operations 3
Consolidated Statements of Cash Flows 4 - 5
Notes to Consolidated Financial Statements 6 - 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS 10 - 11
PART II OTHER INFORMATION 12
(A) EXHIBITS - None
(B) Reports on Form 8-K
<PAGE>
SONICPORT.COM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEET
JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 256,436
Accounts receivable 135,136
Common stock subscription receivable 50,000
Due from related parties 43,133
Prepaid media 975,000
Prepaid services 30,000
Prepaid expenses and other current assets 101,135
--------------
Total current assets 1,590,840
PROPERTY AND EQUIPMENT, net 1,362,061
OTHER ASSETS 48,814
--------------
TOTAL ASSETS $ 3,001,715
==============
The accompanying notes are an integral part of these financial statements.
1
<PAGE>
SONICPORT.COM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEET
JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 445,640
Accrued expenses 32,164
Interest payable 10,416
--------------
Total current liabilities 488,220
CONVERTIBLE PROMISSORY NOTES 250,000
--------------
Total liabilities 738,220
--------------
SHAREHOLDERS' EQUITY
Convertible preferred stock, $0.0001 par value
Series A
800,000 shares authorized
640,000 shares issued and outstanding
($2.50 liquidation preference; dividends
of $45,000 in arrears) 64
Common stock, $0.0001 par value
90,000,000 shares authorized
26,094,735 shares issued and outstanding 2,609
Common stock committed
666,625 shares 2,186,438
Additional paid-in capital 13,502,173
Deficit accumulated during the development stage (13,427,789)
--------------
Total shareholders' equity 2,263,495
--------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 3,001,715
==============
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
<TABLE>
SONICPORT.COM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2000 AND 1999 (UNAUDITED) AND
FOR THE PERIOD FROM JULY 20, 1998 (INCEPTION) TO JUNE 30, 2000 (UNAUDITED)
------------------------------------------------------------------------------------------------
<CAPTION>
For the
For the Period from
Three Months Ended July 20, 1998
June 30, (Inception)
------------------------------ to June 30,
2000 1999 2000
-------------- -------------- --------------
<S> <C> <C> <C>
REVENUES $ 228,074 $ - $ 228,074
COST OF REVENUES 1,232,016 - 1,232,016
-------------- -------------- --------------
GROSS LOSS (1,003,942) - (1,003,942)
-------------- -------------- --------------
OPERATING EXPENSES
General and administrative 1,569,189 698,999 8,527,377
Consulting - related parties - 120,000 377,619
-------------- -------------- --------------
Total operating expenses 1,569,189 818,999 8,904,996
-------------- -------------- --------------
LOSS FROM OPERATIONS (2,573,131) (818,999) (9,908,938)
-------------- -------------- --------------
OTHER INCOME (EXPENSE)
Interest expense (8,880) (270,680) (3,585,713)
Interest income 6,793 2,514 25,195
-------------- -------------- --------------
Total other income (expense) (2,087) (268,166) (3,560,518)
-------------- -------------- --------------
LOSS BEFORE EXTRAORDINARY ITEM (2,575,218) (1,087,165) (13,469,456)
EXTRAORDINARY ITEM
Income from forgiveness of interest payable 41,667 - 41,667
-------------- -------------- --------------
NET LOSS $ (2,533,551) $ (1,087,165) $ (13,427,789)
============== ============== ==============
BASIC AND DILUTED LOSS PER SHARE
Loss before extraordinary item $ (0.10) $ (0.05) $ (0.60)
Extraordinary item - - -
-------------- -------------- --------------
Total basic and diluted loss per share $ (0.10) $ (0.05) $ (0.60)
============== ============== ==============
WEIGHTED-AVERAGE COMMON SHARES
OUTSTANDING 26,572,913 21,519,678 22,430,447
============== ============== ==============
The accompanying notes are an integral part of these financial statements.
3
</TABLE>
<PAGE>
<TABLE>
SONICPORT.COM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED JUNE 30, 2000 AND 1999 (UNAUDITED) AND
FOR THE PERIOD FROM JULY 20, 1998 (INCEPTION) TO JUNE 30, 2000 (UNAUDITED)
------------------------------------------------------------------------------------------------
<CAPTION>
For the
For the Period from
Three Months Ended July 20, 1998
June 30, (Inception)
------------------------------ to June 30,
2000 1999 2000
-------------- -------------- --------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (2,533,551) $ (1,087,165) $ (13,427,789)
Adjustments to reconcile net loss to net cash
used in operating activities
Depreciation 10,750 2,949 53,922
Amortization 30,000 141,740 254,690
Loss on disposal of property and equipment - - 3,571
Interest charges on convertible promissory
notes - 137,500 2,761,377
Issuance of stock for services rendered - - 534,252
Issuance of options for services rendered 15,750 35,000 1,110,845
Issuance of options as financing costs - - 453,750
Issuance of options as compensation expense - - 17,500
Issuance of warrants as financing costs - - 73,778
Issuance of warrants for services rendered - - 27,450
Cashless exercise of stock options - - 75,754
(Increase) decrease in
Accounts receivable (135,136) - (135,136)
Deferred financing costs - (50,000) 266,685
Prepaid services - - (75,625)
Prepaid expenses (55,768) (33,572) (101,135)
Accrued interest (36,291) - 57,386
Other assets (2,385) - (49,564)
Increase (decrease) in
Accounts payable (23,728) (4,331) 403,665
Accrued expenses (16,188) (6,376) 93,164
-------------- -------------- --------------
Net cash used in operating activities (2,746,547) (864,255) (7,601,460)
-------------- -------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (21,743) (16,370) (294,554)
Repayment of note receivable - 45,000 -
Repayments to related parties (46,174) (26,592) (36,239)
-------------- -------------- --------------
Net cash provided by (used in) investing
activities (67,917) 2,038 (330,793)
-------------- -------------- --------------
The accompanying notes are an integral part of these financial statements.
4
</TABLE>
<PAGE>
<TABLE>
SONICPORT.COM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED JUNE 30, 2000 AND 1999 (UNAUDITED) AND
FOR THE PERIOD FROM JULY 20, 1998 (INCEPTION) TO JUNE 30, 2000 (UNAUDITED)
------------------------------------------------------------------------------------------------
<CAPTION>
For the
For the Period from
Three Months Ended July 20, 1998
June 30, (Inception)
------------------------------ to June 30,
2000 1999 2000
-------------- -------------- --------------
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable $ - $ - $ 370,000
Repayment on notes payable (355,000) - (370,000)
Proceeds from convertible promissory notes - 500,000 1,985,000
Proceeds from common stock 666,850 - 666,850
Proceeds from committed common stock - - 3,148,900
Stock issuance costs (49,535) - (428,111)
Proceeds from preferred stock, net 2,000,000 473,500 3,216,050
Payments on preferred stock (400,000) - (400,000)
-------------- -------------- --------------
Net cash provided by financing activities 1,862,315 973,500 8,188,689
-------------- -------------- --------------
Net increase (decrease) in cash and cash
equivalents (952,149) 111,283 256,436
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,208,585 127,654 -
-------------- -------------- --------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 256,436 $ 238,937 $ 256,436
============== ============== ==============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
INTEREST PAID $ 3,504 $ 12,250 $ 104,634
============== ============== ==============
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
During the three months ended June 30, 2000, note holders converted $500,000 of convertible
promissory notes and related finance charges totaling $60,000 into 224,000 shares of
common stock.
During the three months ended June 30, 2000, the Company issued to consultants and vendors
options to purchase 57,500 shares of the Company's common stock for services rendered valued
at $13,750.
The accompanying notes are an integral part of these financial statements.
5
</TABLE>
<PAGE>
SONICPORT.COM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION AND BUSINESS
Sonicport.com, based in Santa Monica, California, is an internet
marketing and technology infrastructure company that specializes in
supporting cost-effective business-to-business and business-to-consumer
revenue-based marketing initiatives. Services of Sonicport.com include
application service provider (ASP), software development, web
development and design, broadband hosting services, e-commerce
services, strategic marketing planning, creative development,
television production, media placement, and real-time ad-performance
auditing.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
---------------------------
The consolidated financial statements include the accounts of
Sonicport.com, Inc. and its wholly owned subsidiary, Sonicport.com,
Inc. (the California corporation), (collectively, the "Company"). All
intercompany accounts and transactions have been eliminated.
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-B. Accordingly, they 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 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 Annual Report on Form 10-KSB,
as amended, for the year ended March 31, 2000. The results of
operations for the three months ended June 30, 2000 are not necessarily
indicative of the results that may be expected for the year ended March
31, 2001.
Going Concern
-------------
The Company has received a report from its independent auditors that
includes an explanatory paragraph describing the Company's uncertainty
to continue as a going concern. These consolidated financial statements
contemplate the ability to continue as such and do not include any
adjustments that might result from this uncertainty.
Revenue Recognition
-------------------
Revenue for internet membership fees are recognized at the completion
of each month. The Company provides an allowance for refunds based on
expected membership cancellations, credits, and charge-backs.
6
<PAGE>
SONICPORT.COM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Advertising Expense
-------------------
Advertising costs are charged to expense as incurred. For the three
months ended June 30, 2000 and 1999, the Company recorded advertising
expense of $802,338 and $339,181, respectively.
NOTE 3 - CASH AND CASH EQUIVALENTS
The Company maintains cash balances at financial institutions located
in California. Accounts at each institution are insured by the Federal
Deposit Insurance Corporation up to $100,000. Uninsured balances
aggregated to $298,538 at June 30, 2000. The Company has not
experienced any losses in such accounts and believes it is not exposed
to any significant credit risk on cash and cash equivalents.
NOTE 4 - COMMON STOCK SUBSCRIPTION RECEIVABLE
During the three months ended June 30, 2000, the Company sold shares of
its common stock through various private placements. In connection with
these private placements, the Company received subscriptions totaling
$716,850. As of June 30, 2000, the Company had collected $666,850. The
balance of $50,000, received in July 2000, is reflected as a common
stock subscription receivable.
NOTE 5 - PROPERTY AND EQUIPMENT
Property and equipment at June 30, 2000 consisted of the following:
Furniture and fixtures $ 75,654
Office equipment 101,984
Computer equipment 1,125,000
Leasehold improvements 106,882
--------------
1,409,520
Less accumulated depreciation and amortization 47,459
--------------
TOTAL $ 1,362,061
==============
Depreciation and amortization expense for the three months ended June
30, 2000 and 1999 was $10,750 and $2,949, respectively. At June 30,
2000, the computer equipment had not been put into service, and
therefore, no depreciation has been recorded.
7
<PAGE>
SONICPORT.COM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
NOTE 6 - CONVERTIBLE PROMISSORY NOTES
On April 11, 2000, the holders of $500,000 of convertible promissory
notes and the Company entered into an amendment to the Subscription
Agreement for the notes. The amendment waived the unpaid interest of
$41,667 and converted the principal of the notes and liquidated damages
of $60,000 into 224,000 restricted shares of common stock of the
Company at a price of $2.50. The Amendment also provided for the
shareholders to be issued additional shares at the sale date of the
common stock in the event the sale price is less than $4.
NOTE 7 - SHAREHOLDERS' EQUITY
Stock Options
-------------
On April 1, 2000, the Company entered into a three-year consulting
agreement for the provision of certain consulting services. The
agreement calls for monthly payments of $5,000 in addition to the
issuance of options to purchase 50,000 shares of the Company's common
stock, which were issued on April 1, 2000, with options to purchase
20,000 shares per quarter.
During the three months ended June 30, 2000, the Company issued options
to purchase 436,300 shares of the Company's common stock pursuant to
the 1999 Stock Option Plan.
Convertible Preferred Stock
---------------------------
On April 11, 2000, the Company issued 800,000 shares of its voting
Series A Convertible Preferred Stock (the "Series A") to an investor
for gross proceeds of $2,000,000. The Series A has a liquidation
preference of $2.50 per share and carries a 15% cumulative dividend
payable on each April 1 and October 1. The Company has the right to
redeem the Series A at any time after issuance at a redemption price of
$2.70 per share, plus any accrued but unpaid dividends, except if the
Company redeems the Series A within 60 days of issuance, the redemption
price shall be $2.50. The Series A is convertible into shares of common
stock as determined by dividing $2.50 by 60% of the average closing bid
price of the Company's common stock for the 10 trading days prior to
the conversion. On May 19, 2000, the Company redeemed 160,000 shares of
the Series A for $400,000.
NOTE 8 - SUBSEQUENT EVENTS
Subsequent to June 30, 2000, the Company issued to consultants and
vendors options to purchase 22,000 shares of the Company's common stock
for services rendered valued at $5,000.
8
<PAGE>
SONICPORT.COM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
NOTE 8 - SUBSEQUENT EVENTS (CONTINUED)
Subsequent to June 30, 2000, the Company issued options to purchase
960,000 shares of the Company's common stock pursuant to the 1999 Stock
Option Plan.
In August 2000, the Company issued 400,000 units in a private placement
for gross proceeds of $300,000. Each unit consisted of one share of its
voting Series B Convertible Preferred Stock (the "Series B") and a
warrant to purchase one share of the Company's common stock. There are
700,000 shares of Series B authorized with a par value of $0.0001. The
Series B has a liquidation preference of $0.75 per share and carries a
10% cumulative dividend payable on each March 1 and September 1. The
Company has the right to redeem the Series B at any time after issuance
at a redemption price of $0.83 per share, plus any accrued but unpaid
dividends. The Series B is convertible upon issuance into common stock
at $0.75 per share. The Company will record a finance charge of
$100,000, representing the difference between the conversion price and
the Company's stock price on the date of issuance. The warrant entitles
the holder to purchase one share of the Company's common stock at $1.25
per share, which represents 115% of the market value of the Company's
stock at the closing date.
9
<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, based in Santa Monica, California, is an internet marketing and
technology infrastructure company that specializes in supporting cost-effective
business-to-business and business-to-consumer revenue-based marketing
initiatives. Through its various business units, Sonicport.com has pioneered a
new cost effective and measurable methodology to assist companies to build
revenues by acquiring and retaining paying customers. Services of Sonicport.com
include application service provider (ASP), software development, web
development and design, strategic alliances, broadband hosting services,
e-commerce services, transaction processing, technical support, customer
service, strategic marketing planning, creative development, television
production, media placement, and real-time ad-performance auditing.
10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - continued
Results of Operations
The Company recognized its first substantial revenues of $228,074 during the
quarter ended June 30, 2000. The Company incurred a net loss of $2,533,551
during the three months ended June 30, 2000 compared with a net loss of
$1,087,165 for the three months ended June 30, 1999. The losses are primarily
the result of the Company's initial operational start-up and incurring media
costs, cost of sales, and general and administrative expenses.
Liquidity and Capital Resources
As of the end of the reporting period, the Company had $256,436 in cash and cash
equivalents. The Company is raising funds for working capital and further
expansion of the company's operations. In August 2000, the Company issued
400,000 units in a private placement for gross proceeds of $300,000. There are a
total of 700,000 units that will be sold, for total gross proceeds of $525,000.
The Company's working capital at June 30, 2000 was $1,102,620 as compared to
$577,429 at June 30, 1999, an increase of $525,191 during the twelve-month
period.
During the three months ended June 30, 2000, the Company utilized $2,746,547 in
cash for operations and net cash used in investing activities of $67,917 were
financed primarily by the issuance of $1,600,000 in preferred stock and proceeds
from the sales of the Company's common stock of $617,315, net of $49,535 in
offering costs.
The company plans to continue 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. The Company believes
that cash flow generated from its operations and its anticipated sales of common
stock should be sufficient to satisfy its working capital and capital
expenditure requirements for at least the next twelve months. The company also
expects that its private placement of common stock should be able to generate
sufficient proceeds to satisfy not only its working capital and expenditures,
but also provide a tool for potential acquisitions of companies with existing
positive cash flow. No assurances can be given, however, that the Company will
be successful in such efforts.
11
<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.
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. None
12
