<PAGE>
U.S. Securities and Exchange Commission
Washington, D.C. 20549
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Form 10-QSB
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 for the quarter ended March 31, 2000.
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|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 for the transition period from ______ to ______.
Commission file number 0-23905
thatlook.com, Inc.
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(Exact Name of Small Business Issuer in its Charter)
Nevada 87-0447497
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(State or other juris- IRS Employer
diction of incorporation) I.D. No.)
5003 Rt. 611 Stroudsburg, PA 18360
(Address of Principal Executive Offices)
570-420-0318
Registrant's Telephone Number
Indicate by check mark whether the Registrant (1) has filed all reports
required to be file by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 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.
(1) Yes X No (2) Yes X NO
--- --- --- ---
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS
Not Applicable
APPLICABLE ONLY TO CORPORATE REGISTRANTS
State the number of shares outstanding of each of the Registrant's classes of
common equity, as of the latest practicable date:
May 12, 2000
16,053,205
thatlook.com, Inc.
INDEX TO FORM 10-QSB
ITEM
NO.
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I FINANCIAL INFORMATION
1. Financial Statements:
Consolidated Balance Sheets at March 31, 2000 (unaudited) and
December 31, 1999
Consolidated Statements of Operations for quarters ending
March 31, 2000 and March 31, 1999 (unaudited)
Consolidated Statements of Cash Flows for quarters ending
March 31, 2000 and March 31, 1999 (unaudited)
Notes to Financial Statements
2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
3. Quantitative and Qualitative Disclosures about Market Risk
II OTHER INFORMATION
2. Changes in securities and use of proceeds
3. Defaults upon senior securities
6. Exhibits and Reports on Form 8-K
SIGNATURES
thatlook.com, Inc. and Subsidiaries
-----------------------------------
Consolidated Balance Sheets
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March 31, December 31,
2000 1999
-ASSETS- (Unaudited)
---------- ---------
Cash $ 141,835 $ 63,471
Accounts receivable - finance company 224,971 73,827
Accounts receivable, net of allowance of $10,465
and $25,465 respectively. 300,759 75,672
Notes receivable, net of allowance of $162,879
and $200,932 respectively. 946,077 1,094,122
Interest receivable 11,365 22,903
Loan receivable, shareholder 14,000 14,000
Subscription receivable - 300,000
Prepaid expenses and other assets 855,132 337,611
Fixed assets - net 516,233 370,506
---------- ---------
Total Assets $3,010,372 $2,352,112
========== ==========
- LIABILITIES AND STOCKHOLDERS' DEFICIT -
Notes payable $ 180,000 $ 203,000
Lines-of-credit payable 769,604 885,367
Convertible subordinated debentures 1,855,138 1,873,297
Accounts payable 859,084 688,143
Accrued expenses 254,487 285,473
Capital lease obligations 51,183 61,064
Payroll and payroll taxes payable 72,356 45,600
Notes payable - shareholders 350,000 0
Provisions for recourse obligation 56,796 113,052
Other liabilities 78,681 150,443
---------- ----------
Total liabilities 4,527,329 4,305,439
---------- ----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' (DEFICIT)
Common stock, $.001 par value, 50,000,000
shares authorized, and 15,980,874
and 15,880,874 shares issued
and outstanding, respectively 15,981 15,881
Additional paid-in-capital 4,957,042 4,258,276
Accumulated deficit (6,489,980) (6,227,484)
---------- ----------
Total Stockholders' deficit (1,516,957) (1,953,327)
---------- ----------
Total Stockholders' deficit & liabilities $3,010,372 $2,352,112
========== ==========
The accompanying notes are an integral part of these consolidated financial
statements.
thatlook.com, Inc. and Subsidiaries
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Consolidated Statements of Operations
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For The Three Months Ended March 31, 2000 and 1999
--------------------------------------------------
2000 1999
(Unaudited) (Unaudited)
----------- -----------
REVENUE:
Marketing fees $ 687,166 $ 894,589
Gain on sale of notes receivable 181,120 328,659
Interest from patient financing 34,985 367,024
Other 25,569 44,558
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TOTAL REVENUE 928,840 1,634,830
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SALES AND MARKETING EXPENSES:
Media, advertising and promotion 327,567 344,486
Payroll and payroll taxes 162,613 288,665
Telephone 47,733 57,435
Credit reporting services 39,755 51,474
Other 7,733 18,326
----------- -----------
TOTAL SALES AND MARKETING EXPENSES 585,401 760,386
----------- -----------
GENERAL AND ADMINISTRATIVE EXPENSES:
Rent and utilities 33,760 26,702
Payroll and payroll taxes 198,058 295,084
Professional and consulting 112,716 98,065
Other 122,397 166,446
----------- -----------
TOTAL GENERAL AND ADMINISTRATIVE EXPENSES 466,931 586,297
----------- -----------
OTHER EXPENSES:
Interest 70,300 475,699
Bad debts 68,704 82,987
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TOTAL OTHER EXPENSES 139,004 558,686
----------- -----------
TOTAL EXPENSES 1,191,336 1,905,369
----------- -----------
NET LOSS $ (262,496) $ (270,539)
============ ===========
BASIC AND DILUTED LOSS PER SHARE $ (0.02) $ (0.02)
============ ===========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING 15,930,874 11,009,846
============ ==========
The accompanying notes are an integral part of these consolidated financial
statements.
thatlook.com, Inc. and Subsidiaries
-----------------------------------
Consolidated Statements of Cash Flows
-------------------------------------
For The Three Months Ended March 31, 2000 and 1999
--------------------------------------------------
2000 1999
(Unaudited) (Unaudited)
----------- -----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS:
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (262,496) $ (270,539)
Adjustments to reconcile net loss to net
cash(used in) provided by operating activities:
Depreciation 43,964 23,124
Bad debts 68,704 82,987
Changes in assets and liabilities:
(Increase)Decrease in accounts and
interest receivable (349,693) 22,535
Decrease(Increase) in other assets 31,345 (65,601)
Increase(Decrease) in accounts payable 170,941 (139,498)
(Decrease)Increase in accrued expenses (30,986) 377,749
Increase(Decrease)in payroll and payroll
taxes payable 26,756 (50,898)
(Decrease)Increase in other liabilities (161,709) 89,516
---------- -----------
Net cash(used in)provided by operating activities (463,174) 69,375
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CASH FLOWS FROM INVESTING ACTIVITIES:
Notes receivable purchased (931,723) (2,247,277)
Notes receivable sold 928,581 2,068,668
Proceeds from collection of notes receivable 101,174 650,694
Acquisition of fixed assets (189,691) (297)
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Net cash (used in) provided by investing
activities (91,659) 471,788
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CASH FLOWS FROM FINANCING ACTIVITIES:
Net repayments on lines-of-credit (115,763) (567,580)
Borrowings from shareholders 350,000 50,000
Repayments of notes payable (51,040) (21,023)
Issuance of common stock 450,000 -
---------- -----------
Net cash provided by(used in)
financing activities 633,197 (538,603)
---------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 78,364 2,560
Cash and cash equivalents, beginning of period 63,471 202,340
---------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 141,835 $ 204,900
========== ===========
The accompanying notes are an integral part of these consolidated financial
statements.
thatlook.com, Inc. and Subsidiaries
-----------------------------------
Consolidated Statements of Cash Flows
-------------------------------------
For The Three Months Ended March 31, 2000 and 1999
--------------------------------------------------
2000 1999
---- ----
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the quarter for
Interest $ 55,945 $ 358,653
========== ==========
Common Stock Warrants issued for
prepaid investment banking services $ 562,672 $ -
========== ==========
The accompanying notes are an integral part of these consolidated financial
statements.
thatlook.com, Inc. and Subsidiaries
-----------------------------------
Notes to Consolidated Financial Statements
------------------------------------------
NOTE 1 - In the opinion of management, the accompanying unaudited and
consolidated financial statements of thatlook.com, Inc. (TLC)and its wholly
owned subsidiaries, which have been reviewed by our independent accountants,
contain all adjustments necessary to present fairly the Company's financial
position as of March 31, 2000 and the results of its operations and cash flows
for all periods presented.
The accounting policies followed by the Company are set forth in Note 3 to the
Company's consolidated financial statements included in its Annual Report on
Form 10-KSB for the year ended December 31, 1999, which is incorporated herein
by reference. Specific reference is made to this report for a description of
the Company's notes to consolidated financial statements included therein.
The results of operations for the period ended March 31, 2000 are not
necessarily indicative of the results to be expected for the full year.
NOTE 2 - DESCRIPTION OF BUSINESS:
thatlook.com, Inc.(TLC), formerly known as Cooperative Images, Inc. TLC was
incorporated in New Jersey on December 5, 1994 and is in the business of
direct response marketing through radio, television and the Internet. TLC's
marketing efforts generate patients who seek elective cosmetic surgery. After
it pre-screens patients interested in cosmetic surgery for creditworthiness,
TLC refers the patients generated from its marketing programs to participating
physicians who pay TLC a monthly marketing fee.
NOTE 3 - GOING CONCERN UNCERTAINTY:
The accompanying consolidated financial statements have been prepared on a
going concern basis which contemplates the realization of assets and
liquidation of liabilities in the ordinary course of business. During the
three month period ended March 31, 2000 the Company incurred significant
losses, which increased the accumulated deficit. Liabilities at March 31,
2000 exceed assets by $1,516,957. In addition, the Company was not in
compliance with certain of the restrictive covenants in its line-of-credit
agreement with a bank and was in default on one of its notes payable(See
also-Note5).
The consolidated financial statements do not include any adjustments that may
be necessary if the Company is unable to continue as a going concern. Should
certain unforseen negative events occur, such as the loss of funding for loan
purchases by a lender or accelerated payment terms for loan covenant
violations, existing capital constraints may limit the ability of the Company
to pay its obligations timely to vendors and lenders and lead to possible loss
of services or funding.
thatlook.com, Inc. and Subsidiaries
-----------------------------------
Notes to Consolidated Financial Statements
------------------------------------------
NOTE 3 - GOING CONCERN UNCERTAINTY(Continued):
Management believes that it has made significant progress since the Fall of
1999 to enhance its financial position. First, during 1999 and through May
2000, the Company raised approximately $1.7 million in cash for shares of the
Company's common stock, and an additional $425,000 in short and intermediate
term convertible debt and demand notes. Second, the Company restructured its
balance sheet and converted $5.6 million of high interest-rate debt to equity
or 5% interest-rate debt. Third, in the first three months of 2000 the
Company continued to realize the benefits from changes initiated in the
beginning of 1999 for marketing programs, media selection and the lower levels
of operating expenses. Specifically, the Company created a three-tiered
pricing structure for its physician marketing program, expanded its
multi-media selection to include Internet marketing and additional print
advertising (e.g. magazines), and reduced operating, payroll and interest
expenses.
The Company's working capital depends greatly on generating the contractually
obligated number of patients for physicians and the latest cost reduction
programs. Recent success recruiting physicians combined with lower per
patient media costs to generate patients for physicians, should improve the
Company's operating results and working capital.
To satisfy the need for a stronger balance sheet and additional operating
capital, in February 2000, the Company signed a three-year agreement with an
investment banker to raise, on a best efforts basis, a minimum of $5 million
dollars of additional equity, and to increase the number of lenders that
purchase loans from the Company. Additional capital is critical to the
Company's ability to grow quickly, capture additional market share, and
sustain it. Equally important, additional capital will provide the resources
to improve the efficiency of the business systems and business model for the
Company, and the physicians. Additionally, capital investments will provide
the resources that will enable the Company to pursue orthodontics and cosmetic
dentistry, hair replacement, and elective corrective eye surgery.
NOTE 4 - SUBSCRIPTION RECEIVABLE:
In December 1999, a principal shareholder subscribed to invest $500,000 for
two million shares of common stock. The shareholder invested $200,000 of the
subscribed amount in December 1999 and $300,000 was invested in January 2000.
thatlook.com, Inc. and Subsidiaries
-----------------------------------
Notes to Consolidated Financial Statements
------------------------------------------
NOTE 5 - LINE-OF-CREDIT:
The Company utilized a line-of-credit with a bank to fund notes receivable
purchases during 1999 and 1998. The line-of-credit permits maximum borrowings
of $1,000,000, due on demand, with interest payable at the bank's base rate
(9.25% at March 31, 2000) plus 4%, totaling an annual rate of 13.25% at March
31, 2000. This line-of-credit is collateralized by certain notes receivable
and is guaranteed by the Company's principal shareholder. Subsequent to March
31, 2000, the Company was not in compliance with certain of the restrictive
covenants. The Company received a waiver of these restrictive covenants
through March 31, 2000, but the bank reserved the right to enforce the
covenants after March 31, 2000. The amount outstanding under this
line-of-credit as of March 31, 2000 was $769,604.
NOTE 6 - INVESTMENT BANKER AND BROKER:
Investment Banker
- -----------------
In February 2000, the Company signed a three-year agreement with an investment
banker to raise a minimum of $5 million dollars of additional equity, and to
increase the number of lenders that purchase loans from the Company. The
investment banker's agreement includes an initial fee of $12,000 and $12,000
per calendar quarter commencing March 1, 2000, payable following the $5
million dollar minimum equity raise. As an inducement to enter into the
agreement, the Company issued 750,0000 warrants to purchase the Company's
common stock to the investment banker. The 750,000 warrants were valued at
$514,639 using the Black-Scholes options pricing model, and were included in
other assets and additional paid-in-capital. In addition, the Company agreed
on a pro-rata basis for each dollar raised of the aggregate $5 million
dollars, to issue up to a maximum of 2,250,000 additional warrants.
These warrants are exercisable at $2 per common share for a five-year period
following the date of the agreement. The agreement includes anti-dilution
provisions, registration rights, and cashless exercise provisions. Upon
consummation of the $5 million equity raise, the investment banker is also
entitled to designate a member of the Board of Directors of the Company.
Broker
- ------
The Company also signed an agreement with the broker who introduced the
investment banker, referred to above. The broker is entitled to receive fees
equal to 2.5% of those fees received by the investment banker, and 70,000
warrants to purchase the Company's common stock, upon the execution of the
investment banker's agreement. These 70,000 warrants were valued at $48,672
using the Black-Scholes options pricing model, and were included in other
assets and additional paid-in-capital. In addition, the Company agreed on a
pro-rata basis for each dollar raised of the aggregate $5 million dollars by
the investment banker, to issue up to a maximum of 210,000 additional
warrants.
thatlook.com, Inc. and Subsidiaries
-----------------------------------
Notes to Consolidated Financial Statements
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NOTE 7 - RELATED PARTY TRANSACTIONS:
Intermediate and Short-Term Convertible Debt:
- ---------------------------------------------
In February 2000, a principal shareholder invested $100,000 as
intermediate-term convertible debt, which bears interest at 12% per annum, and
is payable with accrued interest in 18 months from the issuance date. The
note may be converted, at the holder's option, into unregistered, restricted
common shares at the lowest of 50% of the trailing 10-day trading average
closing price of the Company's publicly-traded stock as of the date of
issuance, as of the date of conversion, or at the lowest rate at which new
equity investors invest. The note is callable by the Company after six months
from the date of its issuance.
In February and March 2000, a principal shareholder and two new shareholders
invested a total of $150,000 as intermediate-term convertible debt, which
bears interest at 12% per annum, and is payable with accrued interest in 18
months from the issuance date. The notes may be converted, at the holders'
options, into common shares at the lower of 50% of the trailing 10-day trading
average closing price of the Company's publicly-traded stock as of the date of
conversion or the lowest rate at which new equity investors invest, with a
minimum conversion price of $1.50 per share. Each note is callable by the
Company after six months from the date of its issuance.
In February 2000, three shareholders agreed to invest a total of $75,000 as
short-term debt that bears interest at 12% per annum for a period of 100 days.
If the Company is unable to redeem these notes at maturity, the holders may
convert, at their option, the short-term notes into intermediate-term
convertible notes on the same basis and terms as described immediately above
for the three notes issued in February and March 2000 to a principal
shareholder and two new shareholders.
In March 2000, four shareholders agreed to invest a total of $50,000 in demand
notes that bear interest at 15% per annum. $25,000 was received in March 2000
and $25,000 in April 2000.
New Office Lease
- ----------------
In March 2000, the Company signed a new lease for office space for three years
until March 2003, with an option to extend the lease for two additional years.
The minimum annual rent is $83,200 for the first three years, and $86,528
annually if the extension option is exercised, plus utilities. The Company's
office space increased from approximately 5,300 square feet to approximately
8,000 square feet in the new location. The Company completed its relocation
in April 2000.
Additional Investor:
- -------------------
In March 2000, an investor purchased for $150,000 a total of 100,000 shares of
unregistered, restricted shares of common stock.
thatlook.com, Inc. and Subsidiaries
-----------------------------------
Notes to Consolidated Financial Statements
------------------------------------------
NOTE 8 - SUBSEQUENT EVENTS:
Patient Imaging Software
- ------------------------
In April 2000, the Company signed a $30,000 agreement with a software
development company to tailor its patient imaging software, so that
prospective patients can download and use the software for a period of time.
Management believes that the software will be available for patients by July
2000.
$5 Million Equity Financing Raise
- ---------------------------------
In conjunction with the investment bankers' efforts to raise $5 million
dollars in equity financing, the investment banker believes that the
agreements detailed below are necessary elements that are required to raise
additional equity financing.
In April 2000, the Company signed an agreement with a consulting firm to
provide investor relations and related Internet services. For these services,
the consulting firm's fee is payable with warrants to purchase the Company's
common stock as follows, provided that on a twenty-one day moving average, the
Company's common stock's price reaches the average closing price and average
daily trading volume exceeds 100,000 shares:
75,000 warrants at an exercise price of $2.50 and a closing price of $3.50
75,000 warrants at an exercise price of $3.50 and a closing price of $4.50
100,000 warrants at an exercise price of $4.50 and a closing price of $5.50
In addition, the consulting firm's fee is payable with an additional 50,000
warrants to purchase the Company's common stock at an exercise price of $4.50,
if on a quarterly basis for the next three quarters, the Company's common
stock price reaches $5.50 on a twenty-one day moving average and average daily
trading volume exceeds 100,000 shares.
In April 2000, the Company signed an agreement with a second consulting firm
to provide investor relations services. For these services, the consulting
firm's fee includes the issuance of 70,000 shares of common stock, 100,000
warrants to purchase the Company's common stock at $3.00 per share, and
100,000 warrants to purchase the Company's common stock at $3.50 per share.
The warrants remain exercisable for five years.
In April 2000, the Company signed an agreement with an advertising firm to
provide advertising and promotional services. The Company issued 67,000
shares of common stock as payment for these services.
Additional Investment
- ---------------------
In May 2000, a principal shareholder invested an additional $250,000 for
166,667 shares of common stock and 166,667 warrants to purchase common stock.
The warrants have an exercise price of $4.00 per share and remain exercisable
for five years.
thatlook.com, Inc. and Subsidiaries
-----------------------------------
Notes to Consolidated Financial Statements
------------------------------------------
NOTE 8 - SUBSEQUENT EVENTS (Continued):
Physicians' Advisory Board
- --------------------------
In April 2000, the Company issued 200,000 options to purchase the Company's
common stock to members of its Physician's Advisory Board at an exercise price
of $2.625 per share.
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
FOR QUARTER ENDED MARCH 31, 2000.
Background
- ----------
thatlook.com, Inc.(TLC), formerly known as Cooperative Images, Inc. TLC was
incorporated in New Jersey on December 5, 1994 and is in the business of
direct response marketing through radio, television and the Internet. TLC's
marketing efforts generate patients who seek elective cosmetic surgery. After
it pre-screens patients interested in cosmetic surgery for creditworthiness,
TLC refers the patients generated from its marketing programs to participating
physicians who pay TLC a monthly marketing fee.
Elective Investments, Inc., (EII), was incorporated on November 26, 1996. EII
prepares financing packages for creditworthy patients of physicians. A
substantial portion of the resulting receivables between the physicians and
the patients are purchased by EII from the physicians. It also pre-screens
patients interested in cosmetic surgery for creditworthiness for physicians
who generate their own patients separately from TLC's marketing programs.
On January 25, 1999 Cooperative Images, Inc. changed its name to thatlook.com,
Inc. by filing an amendment to its certificate of incorporation. In April,
1999, Elective Investments, Inc. (EII), a Pennsylvania corporation, became a
wholly-owned subsidiary of TLC when all its shareholders contributed their
respective shares of capital stock to TLC.
On April 29, 1999 TLC completed a reverse merger with a public entity, whereby
a 100% interest in TLC was acquired by First Target Acquisition, Inc., in
exchange for 9,999,000 "restricted" shares of TLC. TLC became a wholly-owned
subsidiary of FTA. TLC is deemed to be the accounting acquirer. The
financial statements were retroactively restated for TLC, and EII its
wholly-owned subsidiary, for all periods presented. The reverse merger was
accounted for as a recapitalization. Prior to the reverse merger FTA had been
dormant
and operationally inactive for many years. Following the reverse merger, FTA,
a Nevada corporation and TLC's parent company, changed its name to
thatlook.com, Inc. (the "Company") on July 23, 1999, to reflect the name of
the principal operating business.
The financial information presented herein, which has been reviewed by our
auditors, includes: (i) Consolidated Balance Sheets as of March 31, 2000
(Unaudited) and December 31, 1999; (ii) Consolidated Statements of Operations
(Unaudited) for the three month periods ended March 31, 2000 and 1999 and
(iii) Consolidated Statements of Cash Flows (Unaudited) for the three month
periods ended March 31, 2000 and 1999.
RESULTS OF OPERATIONS:
- ----------------------
Overview
- --------
In the first three months of 2000, the Company continued to realize the
benefits from changes initiated in the beginning of 1999 for marketing
programs, media selection and the lower levels of operating expenses.
Specifically, the Company created a three-tiered pricing structure for its
physician marketing program, expanded its multi-media selection to include
Internet marketing and additional print advertising (e.g. magazines), and
reduced operating, payroll and interest expenses.
While total revenue for the first quarter declined 43% when compared to the
prior year first quarter, total revenue for first quarter 2000 increased 14%
over fourth quarter 1999. The increase is even higher, at approximately 32%,
after adjusting for the reduction of interest income in the first quarter
2000, following a December 1999 balance sheet restructuring. As part of the
restructuring, a finance company purchased patients' notes receivable to pay
down a line-of-credit, which was collateralized by the notes receivable. This
restructuring led to a significant decline in interest income and total
revenue. In addition, the Company converted notes payable to equity. Most
importantly, the balance sheet restructuring significantly reduced high,
interest-rate, debt.
Plan of Operation - Comparison of Quarters Ended March 31, 2000 and 1999
- ----------------------------------------------------------------------------
Revenue
- -------
Marketing fee revenues were $687,166 and $894,589 for the quarters ended March
31, 2000 and 1999 respectively, which represented a 23% decrease. The
decrease relates primarily to the Company's decision to reduce the number of
physicians in its marketing program and the switch to a three-tiered pricing
structure. These reductions and pricing changes were made to optimize the
number of patients that were generated for the physicians, compared to the
advertising expenses incurred. These changes enabled the Company to switch to
a more flexible marketing program that could be implemented more effectively
for physicians new to the program and physicians located in smaller media
markets.
The key challenge for the Company is to enroll, or upgrade, physicians in the
marketing program in select geographic areas where patient responses exceed
the Company's contractual performance guarantees. The new tiered pricing
structure enables the Company to tailor its marketing efforts to a physician's
expectations and the physician's individual geographical market. In addition
to the change to tiered pricing program, the Company now typically defers
collection of marketing fee revenues for the first three months on new
contracts. Previously, new physicians had to pay cash-in-advance. This new
payment plan more closely matches proceeds the physicians receive from
surgeries with the payments for generating patients. In short, replacing
prepayments with deferred payments, eliminates the biggest deterrent to enroll
in the marketing program. Management believes that, with tiered pricing and
deferred payments, it can sign up a minimum of 15 physicians per month for the
next three to six months. In fact, in the first 15 days of May 2000, the
Company signed up 15 new physicians with $5,000 per month marketing and
management contracts.
However, while the physicians may defer marketing program payments, the
Company pays for most of its media, such as magazine advertising, often six
weeks in advance. The number of new doctors the Company will enroll will be
limited by the Company's ability to raise additional capital, in part, to fund
advance media payments.
Gains on sale of notes receivable were $181,120 and $328,659 for the quarters
ended March 31, 2000 and 1999 respectively, which represented a decrease of
45%. Loan volume started to decrease in the Fall of 1999 due to changes in
the number of physicians and the transition to new marketing media. While
marketing revenues increased in the first quarter of 2000 when compared to the
prior year, the number of surgeries lags marketing revenue by one to three
months. The yield on loan sales, as a percentage of face value, was 13.5% in
the first quarter of 2000, as compared to 11.3% for the first quarter of 1999
and 14% in the fourth quarter of 1999. Management believes that the yield for
2000 will be similar to 1999's average of 11.8%.
Interest income was $34,985 and $367,024 for the quarters ended March 31, 2000
and 1999 respectively. Two issues explain the large decrease. First, as part
of a restructuring agreement, approximately $3.3 million dollars of patient
loans were taken back on November 30, 1999 by a finance company. Second, the
Company's decision to sell loans means that the underlying loan portfolio
decreases over time, since few loans are added to the portfolio.
Expenses
- --------
Media, advertising and promotional fees were $327,567 and $344,486 for the
quarters ended March 31, 2000 and 1999 respectively. This decrease relates
primarily to the Company's third quarter decision to shift its media focus to
the Internet and other more cost effective media sources. Media expenses,
before other advertising and promotional fees, were $274,542 and $344,044 for
the quarters ended March 31, 2000 and 1999, respectively, a decrease of
$69,502, or 20%. However, as a percentage of marketing revenue, media
expenses were approximately 40% and 38% for the quarters ended March 31, 2000
and 1999 respectively. While the Company benefited from placement of more
cost effective media, excess patients generated for certain physicians did not
increase marketing revenue. As previously discussed, the Company needs to
enroll, or upgrade physicians in the marketing program in select geographic
areas where patient responses exceed the Company's contractual performance
guarantees. In some cases, the print media cost, to generate patients for
office visits with the physicians is 50% below past television expenses, on a
per patient basis.
Internet advertising placed to generate patient leads was $18,742 for the
quarter ended March 31, 2000. The Company did not incur web site advertising
expenses in the first quarter of 1999. Internet leads currently comprise
approximately 50% of all prospective patient leads.
Payroll expenses for sales and marketing personnel was $162,613 and $288,665
for the quarters ended March 31, 2000 and 1999,respectively, which represents
a decrease of $126,052, or 44%. Staff reductions in the second half of 1999
led to this decrease. The Company made the reductions because it was over
staffed based upon its volume of business and gains in operational
efficiencies. The Company installed a predictive dialer to improve the
efficiency of its in-bound and out-bound call management systems and related
payroll expenses. The Company continues to save approximately 40% of payroll
costs for telephone service representatives. In addition, fewer physicians in
the marketing program required less staff members.
Telephone expenses for sales and marketing decreased to $47,733 from $57,435
for the quarters ended March 31, 2000 and 1999, respectively. However, as a
percentage of marketing revenue and gain on sales of notes receivable, this
represented an increase to 5.5% from 4.7% for the quarters ended March 31,
2000 and 1999, respectively. The increase relates primarily to the Company's
transition to a new long distance carrier. The new carrier's contract
includes higher fixed cost below minimum volume levels, but lower per unit
costs on calls above the minimum. Management believes that the Company will
save a minimum of 10% per month by the third quarter, provided certain volume
levels are met.
Credit bureau expense was $39,755 and $51,474 for the quarters ended March 31,
2000 and 1999, respectively, which represented a decrease of $11,719, or 23%.
Management believes that the decrease relates to less volume, and savings
generated from the Company's negotiations for a lower cost per credit report.
Rent and utilities expenses were $33,760 and $26,702 for the quarters ended
March 31, 2000 and 1999, respectively, which represented an increase of
$7,058, or 26%. In March 2000, the Company agreed to pay its former landlord
outstanding common area maintenance charges, and approximately $4,000 of the
landlord's legal expenses. The Company signed a new lease at a new location
with an April 1, 2000 start date. The new office space has approximately 40%
more square feet of work space. Rent expense will increase an estimated
$3,000 per month depending on utility costs, compared to the old building
lease.
Payroll expenses for general and administrative personnel were $198,058 and
$295,084 for the quarters ended March 31, 2000 and 1999 respectively, which
represented a decrease of $97,026 or 33%. In December 1999, the Company
reduced its staffing levels to more cost effective levels. Less doctors in
the marketing program and a smaller loan portfolio require less support staff
such as loan collections and servicing personnel.
Professional and consulting expenses were relatively flat at $112,716 and
$98,065 for the quarters ended March 31, 2000 and 1999 respectively. The
elimination of management and guarantee fees in 1999, saved $76,958 for the
first quarter of 2000. However, these savings were offset by higher,
professional fees related to being a public registrant with the Securities and
Exchange commission. In addition, legal expenses for the first quarter of
1999 were lower based upon updated status of open litigation at that time.
Other general and administrative expenses were $122,397 and $166,446 for the
quarters ended March 31, 2000 and 1999, respectively, which represented a
decrease of $44,049. This expense decreased due to less volume and timing of
expenditures for such things as office supplies and postage.
Interest expense was $70,300 and $475,699 for the quarters ended March 31,
2000 and 1999. Interest expense decreased because of the restructuring of the
notes receivable and line-of-credit previously discussed. The interest
expense decrease related to the restructuring was offset, in part, by the
addition of $350,000 of convertible debt and promissory notes in the first
quarter of 2000.
Liquidity and Capital Resources
- -------------------------------
During 1999 and through May 2000, investors contributed $1.7 million in cash
for shares of the Company's common stock, and an additional $425,000 in short
and intermediate term convertible debt and demand notes. These investments
helped to fund the transition from the Company's prior primary media broker to
new media brokers in 1999, and the transition to print media in 2000. The
Company continues to pay cash in advance for most of its media, particularly
print media.
To satisfy the need for a stronger balance sheet and additional operating
capital, in February 2000, the Company signed a three-year agreement with an
investment banker to raise, on a best efforts basis, a minimum of $5 million
dollars of additional equity, and to increase the number of lenders that
purchase loans from the Company. The investment banker's agreement includes
an initial fee of $12,000 and $12,000 per calendar quarter commencing March 1,
2000, payable following the $5 million dollar minimum equity raise. As an
inducement to enter into the agreement, the Company issued 750,0000 warrants
to purchase the Company's common stock to the investment banker. In addition,
the Company agreed on a pro-rata basis for each dollar raised of the aggregate
$5 million dollars, to issue up to a maximum of 2,250,000 additional warrants.
In conjunction with the investment bankers' efforts, the Company also signed
agreements with two consulting firms for investor relations services, and an
advertising firm. These additional services are key elements that the
investment banker believes are necessary to raise additional equity financing.
Additional capital is critical to the Company's ability to grow quickly,
capture additional market share, and sustain it. Equally important,
additional capital will provide the resources to improve the efficiency of the
business systems and business model for the Company, and the physicians.
Additionally, capital investments will provide the resources that will enable
the Company to pursue orthodontics and cosmetic dentistry, hair replacement,
and elective corrective eye surgery.
The Company's corporate strategy is to sell loans and record the purchase
discount as a gain on sale in the month sold. Should the Company not be able
to sell the loans, earnings would be adversely affected. Two finance
companies currently purchase the majority of the Company's loans. Should the
Company not be able to sell all of its loans or place the loans on a
line-of-credit with a bank, marketing revenues would also be adversely
affected.
While the outstanding balance on a$1 million line-of-credit with a bank at
March 31, 200 was approximately $770,000, the Company is unable to borrow the
additional balance up to the $1 million dollar limit. The underlying patient
notes receivable, which represent the collateral for the line-of-credit, are
below the formula amounts required by the line-of-credit agreement. The
Company needs to collect on certain delinquent loans so that the loans count
in the "availability" formula. Based upon current delinquency of patients'
payments, the Company needs to supply the bank with approximately $130,000 in
patient notes receivable, net of the Company's purchase discount, to be in
compliance with the line-of-credit covenants. The bank provided a waiver of
these covenant violations through March 31, 2000.
Management is currently seeking additional finance companies that want to
purchase loans. We believe that additional finance companies will create a
more competitive environment that will maintain or improve the yield on loan
sales.
In addition to capital investments, the Company's working capital depends
greatly on generating the contractually obligated number of patients for
physicians and recent cost reduction programs. Recent success recruiting
physicians combined with lower per patient media costs to generate patients
for physicians, should improve the Company's operating results and working
capital.
Cautionary Statement on Forward-Looking Statements:
- ---------------------------------------------------
Except for the historical information contained herein, certain of the matters
discussed in this quarterly report on Form 10-QSB are "forward-looking
statements," as defined in Section 21E of the Securities Exchange Act of 1934,
which involve certain risks and uncertainties, which could cause actual
results to differ materially from those discussed herein including, but not
limited to, risks relating to changing economic conditions, maintaining and
increasing both our consumer base and network of physicians, changes in Food
and Drug Administration regulations for breast implants, changes in the
Federal Trade Commissions regulations on Internet privacy, competing
effectively with existing and potential competitors and changes in interest
rates.
Item 3 Quantitative And Qualitative Disclosures about Market Risk:
- -------------------------------------------------------------------
Elective Investments, Inc. currently purchases notes receivable contracts from
cosmetic physicians. The contracts include the highest statutory interest
rate allowed by the governing state laws.
The Company is subject to market risk for changes in interest rates and could
be subjected to increased or decreased competition from other finance
companies, which could have a material adverse effect on the Company's
financial results.
II OTHER INFORMATION
2. Changes in securities and use of proceeds
Intermediate and Short-term Convertible Debt
- --------------------------------------------
In February and March 2000, a principal shareholder and two new shareholders
invested a total of $150,000 as intermediate-term convertible debt, which
bears interest at 12% per annum, and is payable with accrued interest in 18
months from the issuance date. The notes may be converted, at the holders'
options, into common shares at the lower of 50% of the trailing 10-day trading
average closing price of the Company's publicly-traded stock as of the date of
conversion or the lowest rate at which new equity investors invest, with a
minimum conversion price of $1.50 per share. Each note is callable by the
Company after six months from the date of its issuance.
In February 2000, three shareholders agreed to invest a total of $75,000 as
short-term debt that bears interest at 12% per annum for a period of 100 days.
If the Company is unable to redeem these notes at maturity, the holders may
convert, at their option, the short-term notes into intermediate-term
convertible notes on the same basis and terms as described immediately above
for the three notes issued in February and March 2000 to a principal
shareholder and two new shareholders.
Additional Investor:
- -------------------
In March 2000, an investor purchased for $150,000 a total of 100,000 shares of
unregistered, restricted shares of common stock.
Proceeds From Debt and Common Stock
- -----------------------------------
Proceeds received from intermediate and short-term debt and for common stock
in the first quarter of 2000 were used primarily for working capital and
payment of cash-in-advance media payments.
Investment Banker
- -----------------
In February 2000, the Company signed a three-year agreement with an investment
banker to raise a minimum of $5 million dollars of additional equity, and to
increase the number of lenders that purchase loans from the Company. As an
inducement to enter into the agreement, the Company issued 750,0000 warrants
to purchase the Company's common stock to the investment banker. The 750,000
warrants were valued at $514,639 using the Black-Scholes options pricing
model, and were included in other assets and additional paid-in-capital. In
addition, the Company agreed on a pro-rata basis for each dollar raised of the
aggregate $5 million dollars, to issue up to a maximum of 2,250,000 additional
warrants.
These warrants are exercisable at $2 per common share for a five-year period
following the date of the agreement. The agreement includes anti-dilution
provisions, registration rights, and cashless exercise provisions. Upon
consummation of the $5 million equity raise, the investment banker is also
entitled to designate a member of the Board of Directors of the Company.
Broker
- ------
The Company also signed an agreement with the broker who introduced the
investment banker, referred to above. The broker is entitled to receive fees
equal to 2.5% of those fees received by the investment banker, and 70,000
warrants to purchase the Company's common stock, upon the execution of the
investment banker's agreement. These 70,000 warrants were valued at $48,672
using the Black-Scholes options pricing model, and were included in other
assets and additional paid-in-capital. In addition, the Company agreed on a
pro-rata basis for each dollar raised of the aggregate $5 million dollars by
the investment banker, to issue up to a maximum of 210,000 additional
warrants.
3. Defaults upon senior securities
On May 5, 1998, the Company entered into an agreement with a teleservices
company to borrow $200,000 with a 15% annual interest rate, payable in full on
November 30, 1998. The note was delivered by the payee to provide inbound
teleservices as defined. At March 31, 2000 the balance due on this note
was $180,000. The note is personally guaranteed by a principal shareholder of
the Company. At March 31, 2000, the Company was in default under this note
and the payee has instituted a lawsuit for repayment of the balance plus
interest. The Company has countersued claiming inadequate performance in
providing inbound teleservices. A judgment in the amount of $202,550 plus
accrued interest has been entered against the Company for outstanding
principal payments, interest and teleservices invoices. The judgement has
been stayed, pending a hearing in the second quarter of 2000. The difference
between the $180,000 principal balance and $202,550 judgment and additional
accrued interest has been recorded as a liability by the Company and is
included in accrued expenses in the financial statements for 2000. The
additional expense was reflected in 1998.
6. Exhibits and Reports on Form 8-K
No reports on Form 8-K were filed in the first quarter.
Exhibit Index
Exhibit
Number Description
------- -----------
10.1.1 Stroudsburg, Pennsylvania Building Lease
10.1.2 Sands Brothers Engagement Letter
10.1.3 Timothy C. DeHerrara Broker's Agreement
11.1 Computation of Per Share Earnings
15.1 Accountants' Review Report on Interim Financial Statements
27.1 Financial Data Schedule
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
thatlook.com, Inc.
Date: May 15,2000 /s/ Gerard A. Powell
---------------------
Gerard A. Powell
President, Director,
Chief Executive Officer
Date: May 15,2000 /s/ Marvin P. Metzger
----------------------
Marvin P. Metzger
Chief Financial Officer
Exhibit 10.1.1
LEASE AGREEMENT
1. PARTIES.
THIS AGREEMENT, made the 1 st day of March, Two Thousand (2000), by and
between Papillon Contractors Inc, Attention: Marvin Papillon 816 N Ninth
Street Stroudsburg PA 18360(hereinafter called "Lessor"), of the one part, and
That Look.com Inc. a Nevada Corporation and Gerald A. Powell a single man 30
Chatham Hill Rd Stroudsburg PA 18360 (hereinafter called "Lessee"), of the
other part.
2. PREMISES.
WITNESS TO THAT: Lessor does hereby demise and let unto Lessee that certain
building located at 1273 N. 9th Street in Stroud Township formerly known as
Barnaby's Bar in the County of Monroe County, State of Pennsylvania, to be
used and occupied for office activities.
3. TERM.
This lease is for a term of three (3) years beginning the first (1st) day of
April, Two Thousand (2000), and ending the thirty (30th) day of March, Two
Thousand Three (2003) and (1) two year option to begin April 1, 2003.
4. MINIMUM RENT,
for the total rent as follows:
(a) Eighty Three Thousand two hundred Dollars ($83,200.00 ) paid annually,
for three (3) years, payable in monthly installments of Six Thousand Nine
hundred and Ninety three dollars and thirty three cents ($6,933.33) each
month, payable in advance on the first day of each month, beginning the first
day of April, 2000 , the first installment (April rent) to be paid at the time
of signing this Lease.
(b) Eighty Six Thousand Five Hundred Twenty Eight Dollars ($86,528.00)
annually, for the (1) two year option, payable in monthly installments of
Seven Thousand Two Hundred Ten dollars and sixty seven cents ($7,210.67) each
month, payable in advance on the first day of each month.
5. INABILITY TO GIVE POSSESSION.
If Lessor is unable to give Lessee possession of the demised premises, as
herein provided, by reason of the holding over of a previous occupant, or by
reason of any cause beyond the control of the Lessor, the Lessor shall not be
liable in damages to the Lessee therefore, and during the period of the Lessor
is unable to give possession, all rights and remedies of both parties
hereunder shall be suspended.
6. ADDITIONAL RENT.
(a) Damages for Default. Lessee agrees to pay as rent in addition to the
minimum rental herein reserved any and all sums which may become due by reason
of the failure of Lessee to comply with all the covenants of this lease and
pay any and all damages, costs and expenses which the Lessor may suffer or
incur by reason of any default of the Lessee or failure on his part to comply
with the covenants of this lease, and each of them, and also any and all
damages of the demised premises caused by an act or neglect of the Lessee.
(b) Late Payment Fee. Failure to make timely payments of the rental shall
and will result in a late payment fee of $350.00 Dollars after ten (10) day
grace period.
(c) Worthless Check. A charge of $85.00 Dollars will be made for each
worthless check, draft or money order presented to the Lessor or Management
Company.
(d) Water Rent. Lessee further agrees to pay as additional rent, all water
usage consumed at the demised premises if the same becomes due, excluding hook
ups fees, installation of meters and or other charges required to hook into
Stroudsburg Water Authority to the premises (if applicable).
(e) Sewer Rent. Lessee further agrees to pay an additional rent, all sewer
usage charges for use of sewers servicing the demised premises if the same
becomes due, excluding hook ups fees, installation and or other charges
required to hook into Stroud Township Sewer Authority to the premises (if
applicable).
(f) Lessee shall cause all water, sewer and any other utility bills to be
registered in Lessee's name as of the inception date of the Lease and shall
pay the same on a current basis. In the event that Lessor shall be required to
pay or shall pay, any bills for such utilities, such payments shall be
chargeable to Lessee as additional rent hereunder.
(g) CAM Charges. Lessee is responsible for CAM charges of the premises.
These charges include outside parking lot lighting, parking lot maintenance,
snowplowing and landscaping or any other essential services as necessary.
These charges will be billed under separate cover (if provided) by Lessor and
are due and payable upon receipt of billing.
7. PLACE OF PAYMENT.
All rents shall be payable without prior notice of demand at the office of
Papillon Contractors Inc. 816 N. Ninth Street, Stroudsburg, PA 18360 or at
such other place as Lessor may from time to time designate by notice in
writing.
8. AFFIRMATIVE COVENANTS OF LESSEE.
Lessee covenants and agrees that he will without demand
(a) Payment of Rent. Pay the rent and all other charges herein reserved as
rent on the days, times and at the place that the same are made payable,
without fail, and if Lessor shall at any time or times accept said rent or
rent charges after the same shall have become due and payable, such acceptance
shall not excuse delay upon subsequent occasions, or constitute or be
construed as a waiver of any of Lessor's rights. Lessee agrees that any charge
or payment herein reserved, included or agreed to be treated as rent and/or
any other charges or taxes, expenses, or costs herein agreed to be paid by the
Lessee may be proceeded for and recovered by the Lessor by distraint or other
process in the same manner as rent due and in arrears. Any rent that remains
due fifteen (15) days after the due date will constitute a breach of this
lease (Section 14)
(b) Cleaning, Repairing, etc. Keep the demised premises clean and free from
all debris, dirt and other refuse matter; keep the grounds and shrubbery
between the buildings and on-site paving, maintained in a neat condition;
replace all glass windows, doors, etc., broken; keep all waste and rain pipes
open; keep the same in good order and repair as they now are, reasonable wear
and tear and damage by accidental fire or other casualty not occurring through
negligence or Lessee or those employed by or acting for Lessee alone excepted.
The Lessee agrees to surrender the demised premises in the same condition in
which Lessee has herein agreed to keep the same during the continuance of this
Lease.
(c) Requirements of Public Authorities. Comply with any requirements of any
of the constituted public authorities, and with the terms of any State or
Federal statute or local ordinance or regulation applicable to Lessee or his
use of the demised premises, and save Lessor harmless from penalties, fines,
costs or damages resulting from failure to do so.
(d) Fire. Use every reasonable precaution against fire
(e) Surrender of Possession. Peaceably deliver up and surrender possession of
the demised premises to the Lessor at the expiration or sooner termination of
this lease, promptly delivering to Lessor at his office all keys for the
demised premises.
(f) Notice of Fire, etc. Give to Lessor prompt written notice of any
accident, fire or damage occurring on or to the demised premises.
(g) Condition of Pavement. Lessee shall be responsible for the condition of
the pavement, curb, cellar doors, awnings and other erections in the pavement
during the term of this lease; shall keep the pavement free from snow and ice;
and shall be and hereby agrees that Lessee is solely liable for any accidents,
due or alleged to be due to their defective conditions, or to any
accumulations of snow and ice, excepting only defective conditions due to
negligent construction or installation of any driveway, parking area or
walker.
(h) Agency on Removal. The Lessee agrees that if, with the permission in
writing of Lessor, Lessee shall vacate or decide at any time during the term
of this lease, or renewal thereof, to vacate the herein demised premises prior
to the expiration of this lease, or any renewal hereof, Lessee will not cause
or allow any other agent to represent Lessee in any subletting or reletting of
the demised premises other than an agent approved by the Lessor and that
should Lessee do so or attempt to do so, the Lessor may removed any signs that
may be placed on or about the demised premises by such other agent without any
liability to Lessor or to said agent, the Lessee assuming all responsibility
for such action.
(I) Payment of Utilities. Pay the charges for heat, electric, telephone or
any other utility charges incurred in connection with the leased premises.
(j) Insurance. The Lessee agrees to maintain public liability insurance with
policy limits of not less than One Million ($1,000,000.00) Dollars and name
the Lessor as additional insured. The Lessee also agrees to pay Lessor that
part of the Lessors property insurance policy that represents Seven Hundred
Thousand Dollars ($700,000.) as additional rent during the time this lease is
in effect. Lessee agrees that any charge or payment herein reserved, included
or agreed to be treated as rent and/or any other charges or taxes, expenses,
or costs herein agreed to be paid by the Lessee may be proceeded for and
recovered by the Lessor by distraint or other process in the same manner as
rent due and in arrears.
9. NEGATIVE COVENANTS OF LESSEE.
Lessee covenants and agrees that is will do none of the following things
without the consent of Lessor:
(a) Use of Premises. Occupy the demised premises in any other manner or for
any other purpose than as an office and telecommunications center.
(b) Assignment and Subletting. Assign, mortgage or pledge this Lease or
under-let or sub-lease the demised premises, or any part thereof, or permit
any other person, firm or corporation to occupy the demised premises, or any
part thereof. If the Lessee becomes embarrassed or insolvent, or makes an
assignment for the benefit of creditors, or if a petition in bankruptcy is
filed by or against the Lessee or a bill in equity or other proceeding for the
appointment of a receiver for the Lessee is filed, or if the real or personal
property of the Lessee shall be sold or levied upon by an Sheriff, Marshall or
Constable, the same shall be a violation of this covenant.
(c) Signs. Any sign placed on or in any part of the premises except
accordance of existing ordinances and or location of existing Hospice sign.
Lessee shall remove any sign, painted, placed or erected, if permission has
been granted and restore the walls, etc. to their former conditions, at or
prior to the expiration of the Lease. In case of the breach of this covenant
(in addition to all other remedies given to Lessor in case of breach of any
conditions or covenants of this lease) Lessor shall have the privilege of
removing said sign and restoring said walls, etc., to their former condition,
and Lessee, at Lessor's option, shall be liable to Lessor for any and all
expenses so incurred by Lessor.
(d) Alterations, Improvements. Make any structural alterations, structural
improvements, or additions to the demised premised without the written
permission of the Lessor. Lessee also agrees to provide Lessor with a
conceptual floor plan of renovations to be done at the premises and Lessor
agrees to promptly review said plans and approve or disapprove said
alterations, improvements or additions. Any alterations, additions, or
improvements shall be performed by Lessor with the reasonable cost and expense
thereof to be paid by Lessee. All alterations, improvements, additions or
fixtures, whether installed before or after the execution of this lease, shall
remain upon the premises at the expiration or sooner determination of this
lease and become the property of Lessor, unless Lessor shall, prior to the
determination of this lease, have given written notice to Lessee to remove the
same, in which event Lessee will removed such alterations, improvements and
additions and restore the premises to the same good order and condition in
which they now are. Should Lessee fail so to do, Lessor may do so, collecting
at Lessor's option the cost and expense thereof from Lessee as additional
rent. Lessee accepts the premises in an "as is" condition.
(e) Machinery. Use or operate any machinery that, in Lessor's opinion is
harmful to the building or disturbing to other tenants occupying other parts
thereof.
(f) Weights. Place any weights in any portion of the demised premises beyond
the safe carrying capacity of the structure.
(g) Fire Insurance. Do or suffer to be done, any act, matter or thing
objectionable to the fire insurance companies whereby the fire insurance or
any other insurance now in force or hereafter to be placed on the demised
premises, or any part thereof, or on the building of which the demised
premises may be a part, shall become void or suspended, or whereby the same
shall be rated as a more hazardous risk than at the date of execution of this
lease, or employee any person or persons objectionable to the fire insurance
companies or carry or have any benzine or explosive matter of any kind in and
about the demised premises. In case of a breach of this covenant (in addition
to all other remedies given to Lessor in care of the breach of any of the
conditions or covenants of this Lease) Lessee agrees to pay to Lessor as
additional rent any and all increase or increases in premiums on insurance
carried by Lessor on the demised premises, or any part thereof, or on the
building of which the demised premises may be a part caused in any way the
occupancy of Lessee.
(h) Removal of Goods. Remove, attempt to remove or manifest an intention to
removed Lessee's goods or property from or out of the demised premises
otherwise than in the ordinary and usual course of business, without having
first paid and satisfied Lessor for all rent which may become due during the
entire term of this Lease.
(i) Vacate Premises. Vacate or desert said premises during the term of this
lease, or permit the same to be empty and unoccupied.
(j) Garbage/Trash Removal. Lessee shall be permitted to maintain a
"dumpster" or other suitable container for the storage and disposal of
garbage, trash or refuse to be located at the rear of the demised premises and
emptied on a reasonable frequent basis. No garbage, trash and/or refuse shall
be permitted outside of such dumpster or container.
10. LESSOR'S RIGHTS,
Lessee covenants and agrees that Lessor shall have the right to do the
following things and matters in and about the demised premises.
(a) Inspection of Premises. At all reasonable times by himself or his duly
authorized agents to go upon and inspect the demised premises and every part
thereof, and/or at his option to make repairs, alterations and additions to
the demised premises or the building of which the demised premises is a part.
(b) Sale or Rent Sign - Prospective Purchasers or Tenants. To display a "For
Sale" sign at any time, and also, after notice from either party of intention
to terminate this lease, or at any time within three months prior to the
expiration of this lease, a "For Rent" sign, or both "For Rent" and "For Sale"
signs; and all of said signs shall be placed upon such part of the premises as
Lessor may elect and may contain such matter as Lessor shall require.
Prospective purchasers or tenants authorized by Lessor may inspect the
premises at reasonable hours at any time.
(c) Discontinue Facilities and Service. The Lessor may discontinue all
facilities furnished and services rendered, or any of them, by Lessor, not
expressly covenanted for herein, it being understood that they constitute no
part of the consideration for this Lease.
(d) Parking Spaces. The Lessor shall have the right to reconfigure or relocate
existing parking spaces in conjunction with the construction of additional
improvements provided that Lessee shall retain the same number of parking
spaces as currently exist.
11 RESPONSIBILITY OF LESSEE.
(a) Lessee agrees to be responsible for and to relieve and hereby relieves
the Lessor for all liability by reason of any injury or damage to any person
or property in the demised premises, whether belonging to the Lessee or any
other person, caused by any fire, breakage or leakage in any part or portion
of the demised premises, or any part or portion of the building of which the
demised premises is a part, or from water, rain or snow that may leak into,
issue or flow from any part of the said premises, or of the building of which
the demised premises is a part, or from the drains, pipes, or plumbing work of
the same, or from any place or quarter, whether such breakage, leakage, injury
or damage be caused by or result from the negligence of Lessor or his servants
or agents or any person or persons whatsoever.
(b) Lessee also agrees to be responsible for and to relieve and hereby
relieves Lessor from all liability by reason of any damage or injury to any
person or thing which may arise from or be due to the use, misuse, or abuse of
all or any of the elevators, hatches, openings, stairways, hallways, of any
kind whatsoever, which may exist or hereafter be erected or constructed on the
said premises, or from any kind of injury which may arise from any other cause
whatsoever on the said premises or the building of which the demised premises
is a part, whether such damage, injury, use, misuse or abuse be caused by or
result from the negligence of Lessor, his servants or agents or any other
person or persons whatsoever.
12. RESPONSIBILITY OF LESSOR.
(a) Total Destruction of Premises. In the event that the demised premises is
totally destroyed or so damaged by fire or other casualty not occurring
through fault or negligence of the Lessee or those employed by or acting from
him, that the same cannot be repaired or restored within a reasonable time,
this Lease shall absolutely cease and determine, and the rent shall abate for
the balance of the term.
(b) Partial Destruction of Premises. If the damage caused as above be only
partial and such that the premises can be restored to their then condition
within a reasonable time, the Lessor may, at his option, restore the same with
reasonable promptness, reserving the right to enter upon the demised premises
for that purpose. The Lessor also reserves the right to enter upon the demised
premises whenever necessary to repair damage caused by fire or other casualty
to the building of which the demised premises is a part, even though the
effect of such entry be to render the demised premises or a part thereof
untenantable. In either event the rent shall be apportioned and suspended
during the time the Lessor is in possession, taking into account the
proportion of the demised premises rendered untenantable and the duration of
the Lessor's possession.
(c) Repairs by Lessor. Lessor shall make such election to repair the
premises or terminate this lease by giving notice thereof to Lessee at the
leased premised within thirty days from the day Lessor received notice that
the demised premises had been destroyed or damaged by fire or other casualty,
however, Lessor agrees to deliver premises with all heat, air, HVAC Units, hot
water heaters, well and septic in good working order at the time Lessee takes
occupancy of the premises.
(d) Representations of Condition of Premises. Lessor shall not be liable for
any damage, compensation or claim by reason of inconvenience or annoyance
arising from the necessity of repairing any portion of the building, the
interruption in the use of the premises, or the termination of this lease by
reason of the destruction of the premises.
(e) Representation of Condition of Premises. The Lessor has let the demised
premises in their present condition and without any representations on the
part of the Lessor, his officers, employees, servants and/or agents. It is
understood and agreed that Lessor is under no duty to make repairs or
alterations at the time of letting or at any time thereafter, except as may be
specifically set forth herein.
(f) Zoning. Lessor represents that the premises is zoned for general
commercial use and is not in any violation of said zoning. Lessee is advised
to confirm with Stroud Township that tenants intended use of premises is
allowed in said zoning district. Any permits (if any) to occupy the premises
are the responsibility of the Lessee.
13. MISCELLANEOUS AGREEMENTS AND CONDITIONS.
(a) Waiver of Custom. It is hereby covenanted and agreed, any law, usage or
custom to the contrary notwithstanding, that Lessor shall have the right at
all times to enforce the covenants and provisions of this lease in strict
accordance with the terms hereof, notwithstanding any conduct or custom on the
part of the Lessor in refraining from so doing at any time or times; and,
further, that the failure of Lessor any time or times to enforce his rights
under said covenants and provisions strictly in accordance with the same shall
not be construed as having created a custom in any way or manner contrary to
the specific terms, provisions and covenants of this lease or as having in any
way or manner modified the same.
(b) Conduct of Lessee. This lease is granted upon the express condition that
Lessee and/or the occupants of the premises herein leased, shall not conduct
themselves in a manner which the Lessor in his sole opinion may deem improper
or objectionable, and that if at any time during the term of this Lease or any
extension or continuation thereof, Lessee or any occupier of the said premises
shall have conducted himself, herself or themselves in a manner which Lessor
in his sole opinion deems improper or objectionable, Lessee shall be taken to
have broken the covenants and conditions of this lease, and Lessor will be
entitled to all the rights and remedies granted and reserved herein for the
Lessee's failure to observe any of the covenants and conditions of this Lease.
(c) Failure of Lessee to Repair. In the event of the failure to Lessee
promptly to perform the covenants of Section 8(b) hereof, Lessor may go upon
the demised premises and perform such covenants, the cost thereof, at the sole
option of Lessor, to be charged to Lessee as additional and delinquent rent.
14. REMEDIES OF LESSOR
If the Lessee
(a) Does not pay in full when due any and all installments of rent and/or
any other charge or payment herein reserved, included, or agreed to be treated
or collected as rent and/or any other charge, expense or cost herein agreed to
be paid by the Lessee or
(b) Violates or fails to perform or otherwise breaks any covenant or
agreement herein contained; or
(c) Vacates the demised premises or removes or attempts to removed or
manifests an intention to removed any goods or property therefrom otherwise
than in the ordinary and usual course of business without having first paid
and satisfied the Lessor in full for all rent and other charges then due or
that may thereafter become due until the expiration of the then current term,
above mentioned; or
(d) Becomes embarrassed or insolvent, or makes an assignment for the benefit
of creditors, or if a petition in bankruptcy is filed by or against the
Lessee, or a bill in equity or other proceeding for the appointment of a
receiver for the Lessee is filer, or if proceedings for reorganization or for
composition with creditors under any State or Federal law be instituted by or
against Lessee, or if the real or personal property of the Lessee shall be
sold or levied upon by any Sheriff, Marshall or Constable;
then, and in any of said events, there shall be deemed to be a breach of this
lease, and thereupon ipso facto and without entry or other actions by Lessor
and with only written notice to the Lessee;
(1) The Lessee shall pay a fee of eighty thousand dollars ($80,000) as well
as all other charges, payments, costs, and expenses herein agreed to be paid
by the Lessee, or at the option of Lessor any part thereof, and also all costs
and officers' commissions including watchmen's wages and further including the
five percent chargeable by Act of Assembly to the Lessor, shall, in addition
to any and all installments of rent already due and payable and in arrears
and/or any other charge or payment herein reserved, included or agreed to be
treated or paid by the Lessee which may be due and payable and in arrears, be
taken to be due and payable and in arrears as if by the terms and provisions
of this Lease, the balance of unpaid rent but in no event over $80,000 and
other charges, payments, taxes, costs and expenses were on that date payable
in advance; and if this Lease or any part thereof is assigned, or if the
premises or any part thereof is sub-let, Lessee hereby irrevocably constitutes
and appoints Lessor Lessee's agent to collect the rents due by such assignee
or sub-lessee and apply the same to the rent due hereunder without in any way
affecting Lessee's obligation to pay any unpaid balance of rent due hereunder;
(2) This Lease and the term hereby created shall dete ne and become
absolutely void unless cured within forty five (45) days of said breech by
full payment of total past due amount. Lessor shall be entitled to recover
damages for such breach in an amount equal to the amount of rent reserved for
the balance of the term of this lease but in no event over $80,000 plus any
other money due and owed.
15. FURTHER REMEDIES OF LESSOR
In the event of any default as above set forth in Section 14, the Lessor, or
anyone acting on Lessor's behalf, at Lessor's option:
(a) may without notice or demand enter the demised premises, breaking open
locked doors if necessary to effect entrance, without liability to action for
prosecution or damages for such entry or for the a manner thereof, for the
purpose of distraining or levying and for any other purposes, and take
possession of and sell all goods and chattels at auction, on three days'
notice served in person on the Lessee or left on the premises, and pay the
said Lessor out of the proceeds, and even if the rent be not due and unpaid,
should the Lessee at any time remove or attempt to remove goods and chattels
from the premises without leaving enough thereon to meet the next periodical
payment, Lessee authorizes the Lessor to follow for a period of ninety days
after such removal, take possession of and sell at auction upon like notice,
sufficient of such goods to meet the proportion of rent accrued at the time of
such removal; and the Lessee hereby releases and discharges the Lessor, and
his agents, from all claims, actions suits, damages and penalties, for or by
reason or on account of any entry, distraint, levy, appraisement or sale;
and/or
(b) may enter the premises after forty five (45) days, and without demand
proceed by distress and sale of the goods there found to levy the rent and/or
other charges herein payable as rent, and all costs and officers' commissions,
including watchmen's wages and sums chargeable to Lessor, and further
including a sum equal to 5% of the amount of the levy as commissions to the
constable or other person making the levy, shall be paid by the Lessee, and in
such case all costs, officers' commission and other charges shall immediately
attach and become part of the claim of Lessor for rent and any tender of rent
without said costs, commission and charges made after the issue of a warrant
of distress shall not be sufficient to satisfy the claim of the Lessor. Lessee
hereby expressly waives in favor of any limitation as to the goods upon which,
or the time within which, distress is to be made after removal of goods, and
further relieves the Lessor of the obligation of proving or identifying such
goods, it being the purpose and intent of this provision that all goods of
Lessee, whether upon the demised premises or not, shall be liable to distress
for rent. Lessee waives in favor of Lessor all right under the Act of assembly
of April 6, 1951, P.L. 69, and all supplements and amendments thereto that
have been or may hereafter be passed, and authorizes the sale of any goods
distrained for rent at any time after five days from said distraint without
any appraisement and/or condemnation thereof.
(c) The Lessee further waives the right to issue a Writ of Replevin under
the Pennsylvania Rules of Civil Procedure, No. 1071 &c and Laws of the
Commonwealth of Pennsylvania, or under any other law previously enacted and
now in force, or which may be hereafter enacted for the recovery of any
articles, household good, furniture, etc., seized under a distress for rent or
levy upon an execution for rent, damages or otherwise; all waivers
hereinbefore mentioned are hereby extended to apply to any such action; and/or
(d) may lease said premises or any part or parts thereof to such person or
persons as my in Lessor's discretion seem best and the Lessor's discretion
seem best and the Lessee shall be liable for any loss of rent for the balance
of the then current term.
16. CONFESSION OF JUDGEMENT.
If rent and/or any charges hereby reserved as rent shall remain unpaid for a
period of forty five (45) days when the same ought to be paid, Lessee hereby
empowers any Prothonotary, Clerk of Court or attorney of any Court of Record
to appear for Lessee in any and all actions which may be brought for rent
and/or the charges, payments, costs and expenses reserved as rent, or agreed
to be paid by the Lessee and/or to sign for Lessee an agreement for entering
in any competent Court an amicable action or actions for the recovery of rent
or other charges, payments, costs and expenses, and in said suits or in said
amicable action or actions to confess judgement against Lessee for all or any
part of the rent specified in this lease and then against Lessee for all or
any part of the rent specified in this lease and then unpaid including, at
Lessor's option, the rent for the entire unexpired balance of the term of this
lease, and/or other charges, payments, costs and expenses reserved as rent or
agreed to be paid by the Lessee, and for interest and costs together with any
attorney's commission of 15%. Such authority shall not be exhausted by one
exercise thereof, but judgement may be confessed as aforesaid from time to
time as often as any of said rent and/or other charges, payments, costs and
expenses, reserved as rent shall fall due or be in arrears, and such powers
may be exercised as well after the expiration of the original term and/or
during any extension or renewal of this Lease.
17. EJECTMENT,
When this Lease shall be determined by condition broken and after said forty
five (45) days, either during the original term of this lease or any renewal
or extension thereof, and also when and as soon as the term hereby created or
any extension thereof shall have expired, it shall be lawful for any attorney
as attorney for Lessee to file an agreement for entering in any competent
Court an amicable action and judgement in ejectment against Lessee and all
persons claiming under Lessee for the recovery by Lessor of possession of the
herein demised premises, for which this Lease shall be his sufficient warrant,
whereupon, if Lessor so desires, a writ of Execution or of Possession may
issue forthwith, without any prior writ or proceedings whatsoever, and
provided that if for any reason after such action shall have been commenced
the same shall be determined and the possession of the premises hereby demised
remain in or be restored to Lessee, Lessor shall have the right upon any
subsequent default or defaults, or upon the termination of this lease as
hereinbefore set forth, to bring one or more amicable action or actions as
hereinbefore set forth to recover possession of the said premises.
18. AFFIDAVIT OF DEFAULT.
In any amicable action of ejectment and/or for rent in arrears, Lessor shall
first cause to be filed in such action an affidavit made by him or someone
acting for him setting forth the facts necessary to authorize the entry of
judgement, of which facts such affidavit shall be conclusive evidence and if a
true copy of this lease (and of the truth of the copy such affidavit shall be
sufficient evidence) be filed in such action, it shall not be necessary to
file the original as a warrant of attorney, any rule of Court, custom or
practice to the contrary notwithstanding.
19. WAIVERS BY LESSEE OF ERRORS RIGHT OF APPEAL, STAY EXEMPTION,
INQUISITION.
Lessee expressly agrees that any judgement, order or decree entered against
him by or in any Court or Magistrate by virtue of the powers of attorney
contained in this lease, or otherwise, shall be final, and that he will not
take an appeal, certiorari, writ of error, exception or objection to the same,
or file a motion or rule to strike off or open or to stay execution of the
same, and releases to Lessor and to any and all attorneys who may appear for
Lessee all errors in said proceedings, and all liability therefore. Lessee
expressly waives the benefits of all laws, now or hereafter in force,
exempting any goods on the demised premises, or elsewhere from distraint, levy
or sale in any legal proceedings taken by the Lessor to enforce any right
under this lease. Lessee further waives the right of inquisition on any real
estate that may be levied upon to collect any amount which may become due
under the terms and conditions of this Lease, and does hereby voluntarily
condemn the same and authorizes the Prothonotary or Clerk of Court to issue a
Writ of Execution or other process upon Lessee's voluntary condemnation, and
further agrees that the said real estate may be sold on a Writ of Execution or
other process. If proceedings shall be commenced by Lessor to recover
possession under the Acts of Assembly, either at the end of the term or sooner
termination of this lease, or for nonpayment of rent or any other reason
Lessee specifically waivers the right to the three months' notice and/or the
fifteen or thirty days' notice required by the Act of April 6, 1951, P.L. 69,
and agrees that ten (10) days' notice shall be sufficient in either or any
other case.
20. RIGHT OF ASSIGNEE OF LESSOR
The right to enter judgement against Lessee and to enforce all of the other
provision of this lease hereinabove provided for may, at the option of any
assignee of this lease, be exercises by any assignee of the Lessor's right,
title and interest in this lease in his, her or their own name,
notwithstanding the fact that any or all assignments of the said right , title
and interest may not be executed and/or witnessed in accordance with the Act
of Assembly of May 28, 1715, 1 Sm. L. 90, and all supplements and amendments
thereto that have been or may hereafter be passed and Lessee hereby expressly
waives the requirements of said Act of Assembly and any and all laws
regulating the manner and/or form in which such assignments shall be executed
and witnessed.
21. REMEDIES CUMULATIVE.
All of the remedies hereinbefore given to Lessor and all rights and remedies
given to him by law and equity shall be cumulative and concurrent. No
determination of this lease or the taking or recovering of the premises shall
deprive Lessor of any of his remedies or actions against the Lessee for rent
due at the time or which, under the terms hereof, would in the future become
due as if there has been no determination, or for any and all sums due at the
time of which, under the terms hereof, would be in the future become due as if
there had been no determination nor shall the bringing of any action for rent
or breach of covenant, or the resort to any other remedy herein provided for
the recovery of rent be construed as a waiver of the right to obtain
possession of the premises.
22. CONDEMNATION.
In the event that the premises demised or any part thereof is taken or
condemned for a public or quasi-public use, this lease shall, as to the part
so taken, terminate as of the date title shall vest in the condemnor, and rent
shall abate in proportion to the square feet of leased space taken or
condemned or shall cease if the entire premises be so taken. In either event
the Lessee waives all claims against the Lessor by reason of the complete or
partial taking of the demised premises, and it is agreed that the Lessor shall
give notice of the partial or complete termination of this lease by reason of
the aforesaid, to Lessee within fifteen (15) days of Lessor's receipt of the
same.
23. SUBORDINATION.
This Agreement of Lease and all its terms, covenants and provisions are and
each of them is subject and subordinate to any lease or other arrangement or
right to possession, under which the Lessor, is in control of the demised
premises, to the rights of the owner or owner's of the demised premises and of
the land or buildings of which the demised premises are a part, to all right
of the Lessor's landlord and to any and all mortgages and other encumbrances
now or hereafter placed upon the demised premises or upon the land and/or the
buildings containing the same; the Lessee expressly agrees that if Lessor's
tenancy, control or right to possession shall terminate either by expiration,
forfeiture or otherwise, then this lease shall thereupon immediately terminate
and the Lessee shall, thereupon, give immediate possession; the Lessee hereby
waives any and all claims for damages or otherwise by reason of such
termination as aforesaid.
24. TERMINATION OF LEASE.
It is hereby mutually agreed that this Lease shall terminate at the end of
said term unless the extension or option of said Lease is otherwise mutually
agreed to in writing by the parties hereto.
25. NOTICES.
All notices required to be given by Lessor to Lessee shall be sufficiently
given by registered mail to: That Look.com Inc c/o Gerald A. Powell 30 Chatham
Hill Rd Stroudsburg PA 18360, and notices given by Lessee to Lessor must be
given by registered mail to: Papillon Contractors Inc Attention Marvin
Papillon 816 N Ninth Street Stroudsburg PA 18360, and as against Lessor the
only admissible evidence that notice has been given by Lessee shall be a
registered return receipt signed by Lessor or his agent.
26. LEASE CONTAINS ALL AGREEMENTS.
It is expressly understood and agreed by and between the parties hereto that
this lease and the riders attached hereto and forming a part hereof set forth
all of the promises, agreements, conditions or understandings, either oral or
written, between them other than are herein set forth. It is further
understood and agreed that, except as herein otherwise provided, no subsequent
alteration, amendment, charge or addition to this lease shall be binding upon
Lessor or Lessee unless reduced to writing and signed by them.
27. HEIRS AND ASSIGNEES.
All right and liabilities herein given to, or imposed upon, the respective
parties hereto shall extend to and bind the several and respective heirs,
executors, administrators, successors and assigns of said parties; and if
there shall be more than on Lessee, they shall all be bound jointly and
severally by the terms, covenants and agreements herein, and the word "Lessee"
shall be deemed and taken to mean each and every person or party mentioned as
a Lessee herein, be the same one or more; and if there shall be more than one
Lessee, any notice required or permitted by the terms of this lease may be
given by or to any one thereof, and shall have the same force and effect as if
given by or to all thereof. The words "his" and "him" wherever stated herein
shall be deemed to refer to the "Lessor" and "Lessee" whether such Lessor or
Lessee be singular or plural and irrespective of gender. No right however,
shall inure to the benefit of any assignee of Lessee unless the assignment to
such assignee has been approved by Lessor in writing as aforesaid.
28. SECURITY DEPOSIT.
Lessee shall, upon execution hereof, deposit with Lessor as security for the
performance of all the terms, covenants, and condition of this Lease, the sum
of Six Thousand Nine Hundred Thirty three dollars and thirty three
($6,933.33). The deposit is to be retained by Lessor until the expiration of
this lease and shall be returnable to Lessee provided the (1) premises have
been vacated; (2) Lessor shall have inspected the premises after such
vacation; and (3) Lessee shall have complied with all the terms, covenants,
and conditions of the lease, in which event the deposit so paid hereunder
shall be returned to Lessee; otherwise, said sum deposited hereunder or any
part thereof may be retained by Lessor at his option, as liquidated damages,
or may be applied by Lessor against any actual loss, damage or injury
chargeable to Lessee hereunder or otherwise, if Lessor determines that such
loss, damage or injury exceed said sum deposited. Lessor's determination of
the amount, if any, to be returned to Lessee shall be final. It is understood
that the said deposit is not to be considered as the last rental due to the
lease. Said security deposit will not be held in a non-interest bearing or any
other account.
29. RECORDING.
This Agreement shall not be placed of record in the Monroe County Recorder's
Office or any other place of public record.
30. READINGS NO PART OF LEASE.
Any headings preceding the text of the several paragraphs and sub-paragraphs
hereof are inserted solely for convenience of reference and shall not
constitute a part of this lease, nor shall they affect its meaning,
construction or effect.
31. COMMISSIONS DUE BROKERS.
Lessor agrees to pay a real estate commission to the firm of Wilkins &
Associates Real Estate Inc in the amount of $6,500.00 to be paid at the time
the lease is signed by all parties and a real estate commission of $3,000.00
in the event this lease is extended beyond the three (3) year term and a real
estate commission of 2% of the sales price (to be paid at closing) in the
event the tenant purchases the premises.
32. RIGHT OF FIRST REFUSAL.
Lessor hereby grants to the Lessee the right of first refusal to purchase the
premises. Lessor agrees in the event a bonafide offer to purchase the premised
is given to the Lessor, he will offer the Lessee the same terms and
conditions. The Lessee will then have ten (10) days to accept or reject the
terms and conditions by giving written to the Lessor.
33. EXERCISE OF OPTION PERIOD
Lessor and Lessee hereby mutually agree that either party only with mutual
consent shall have the rights to exercise the (1) two year option under the
terms and conditions described in this Lease. Lessor and Lessee shall notify
one another with desire to exercise said option in writing not less than
ninety(90) days prior to the expiration of the Lease.
IN WITNESS WHEREOF, the parties hereto have executed these presents the day
and year first above written, and intend to be legally bound thereby.
SEALED AND DELIVERED IN THE PRESENCE OF:
/s/Marvin Papillion
- ------------------- ---------------------
PAPILLON CONTRACTING INC. Lessor Witness
Marvin Papillon
/s/ Gerard A. Powell pres. /s/ Vincent Trapasso
- -------------------------- --------------------
ThatLook.com, Inc. President Lessee Witness
Gerald A. Powell President
/s/ Gerard A. Powell /s/ Vincent Trapasso
- ------------------------- --------------------
Gerald A. Powell a single man Lessee Witness
w:\colleen\papillonlse.wpd
Exhibit 10.1.2
February 18, 2000
thatlook.com, Inc.
210 West Fourth Street, Suite 101
East Stroudsburg, Pennsylvania 18301
Attn Gerard A. Powell
President and Director
Dear Mr. Powell:
This is to confirm our understanding that Sands Brothers & Co., Ltd. ("Sands
Brothers") has been engaged as the exclusive financial adviser and consultant
to thatlook.com, Inc., its successors, assigns, subsidiaries and affiliates
(collectively the "Company") with respect to corporate finance, merger and
acquisition and financial services matters, for a three year period commencing
with your acceptance of this agreement.
For purposes of this agreement, the term "Acquisition Transaction" means (i)
any merger, consolidation, reorganization or other business combination
pursuant to which the businesses of a third party are combined with that of
the Company, (ii) the acquisition, directly or indirectly, by the Company of
all or a substantial portion of the assets or common equity of a third party
by way of negotiated purchase or otherwise or (iii) the acquisition, directly
or indirectly, by a third party of all or a substantial portion of the assets
or common equity of the Company by way of negotiated purchase or otherwise. In
addition, for purposes of this agreement, the term "Financing Transaction"
means a public offering, private placement, institutional financing,
syndication or other sale of equity or debt securities of the Company or other
on-balance sheet or off-balance sheet corporate finance transaction of the
Company.
For purposes of this agreement, except as specifically excluded herein, the
term "Business Transactions" shall mean joint ventures, strategic alliances
and partnerships, licensing and royalty arrangements, value added customers
and clients and other similar business enhancing agreements ("Business
Transactions" and with Acquisition Transactions, "Transactions").
Revision Date 2/18/00
thatlook.com, Inc.
February 18, 2000
Page 2
A. Financial Advisory Services
The Company hereby retains Sands Brothers to perform consulting services
related to corporate finance and financial service matters. In this regard,
Sands Brothers shall devote such business, time and attention to matters on
which the Company shall request its services, as shall be determined by Sands
Brothers in its discretion. All services shall be rendered by Sands Brothers
in New York City unless otherwise determined by Sands Brothers. The fee for
such services shall be an initial payment of $12,000 and $12,000 per calendar
quarter in advance, commencing on March 1, 2000, in addition to any other,
compensation and reimbursement of expenses described here in. This fee shall
accrue from March 1, 2000 and be payable upon consummation of the $5,000,000
private placement contemplated herein. Anything contained herein to the
contrary notwithstanding, in Sands Brothers' sole discretion, such fee may be
paid in warrants and/or shares of capital of the Company upon such terms and
conditions as may be mutually agreed upon.
During the term of this agreement, Sands Brothers shall provide the Company
with such regular and customary financial advisory services as is reasonably
requested by the Company, provided that Sands Brothers shall not be required
to undertake duties not reasonably within the scope of the financial advisory
services in which it is generally engaged. In performance of its duties, Sands
Brothers shall provide the Company with the benefits of its best judgment and
efforts. It is understood and acknowledged by the parties that the value of
Sands Brothers' advice is not measurable in a quantitative manner, and Sands
Brothers shall be obligated to render advice, upon the request of the Company,
in good faith, as shall be determined by Sands Brothers, but shall not be
obligated to spend any specific amount of time in doing so. Sands Brothers'
duties may include, but will not necessarily be limited to:
(i) advice regarding formation of corporate goals and their implementation;
(ii) advice regarding the financial structure of the Company, its divisions
or
subsidiaries or any programs and projects undertaken by the Company;
(iii) advice regarding the securing, when necessary and if possible, of
financing (other than with respect to a Financing Transaction);
(iv) advice regarding corporate organization, personnel and selection of
needed specialty skills; and
(v) review of possible joint venture, merger, acquisition or similar
proposals
for the Company (other than with respect to an Acquisition Transaction).
Revision date: 2/18/00
thatlook.com, Inc.
February 18, 2000
Page 3
The Company acknowledges that Sands Brothers or its affiliates are in the
business of providing financial advisory services (of all types contemplated
by this agreement) to others. Nothing herein continued shall be construed to
limit or restrict Sands Brothers in conducting such business with respect to
others, or in rendering such advice to others.
The Company recognizes and confirms that Sands Brothers in acting pursuant to
this engagement will be using information in reports and other information
provided by others, including, without limitation, information provided by or
on behalf of the Company, and that Sands Brothers does not assume
responsibility, for and may rely, without independent verification, on the
accuracy and completeness of any such reports and information. The Company
hereby warrants that any information relating to the Company that is furnished
to Sands Brothers by or on behalf of the Company will be fair, accurate and
complete and will not contain any material omissions or misstatements of fact.
The Company agrees that any information or advice rendered by Sands Brothers
or its representatives in connection with this engagement is for the
confidential use of the Company's Board of Directors and its advisors only in
its evaluation of the matters for which Sands Brothers has been engaged and,
except as otherwise required by law, the Company will not and will not permit
any third party to disclose or otherwise refer to such advice or information
in any manner without Sands Brother's prior written consent.
B. Transactions
In connection with a proposed Acquisition Transaction, Sands Brothers'
financial advisory services may include the following: (i) assistance in the
evaluation of a third party from a financial point of view, (ii) assistance
and advice with respect to the form and structure of the Acquisition
Transaction and/or the financing thereof, (iii) conducting discussions and
negotiations regarding an Acquisition Transaction and (iv) providing other
related financial advice and assistance as the Company may reasonably request
in connection with an Acquisition Transaction.
In connection with a proposed Business Transaction, Sands Brothers' services
may include the following: (i) assistance in the location of a third party to
enter into a Business Transaction, (ii) assistance and advice with respect to
the form and structure of the Business Transaction, (iii) conducting
discussions and negotiations regarding an Business Transaction and (iv)
providing other related business advice and assistance as the Company may
reasonably request in connection with a Business Transaction.
As contemplated in this Section B, the term "Business Transaction"
specifically excludes transactions which have been initiated by the Company
prior to execution of this agreement such as: (a) any and all arrangements the
Company may make for the sale
Revision date: 2/18/00
thatlook.com, Inc.
February 18, 2000
Page 4
of company-originated patient loans to third parties and/or (b) co-marketing
arrangements.
For purpose of this agreement, "Consideration" means the aggregate value,
whether in cash, securities, assumption (or purchase subject to) of debt or
liabilities (including, without limitation, indebtedness for borrowed money,
pension liabilities and guarantees), license fees, royalty fees, joint venture
interests or other property, obligations or services, paid or payable by or to
the Company directly or indirectly (in escrow or otherwise) or otherwise
assumed in connection with a Transaction. The value of such Consideration
shall be determined as follows:
(a) the value of securities, liabilities, obligations, property and services
shall be the fair market value as reasonably determined by Sands Brothers at
the date of the closing of the Transaction; and
(b) the value of indebtedness, including indebtedness assumed, shall be the
face amount.
If the Consideration payable in an Transaction includes contingent payments to
be calculated by reference to uncertain future occurrences, such as future
financial or business performance, then any fees of Sands Brothers relating to
such consideration shall be payable at the earlier of (i) the receipt of such
Consideration or, (ii) the time that the amount of such Consideration can be
determined.
In connection with our services, you agree if, during the period Sands
Brothers is retained by you or, within two years thereafter, whether or not
this letter agreement is in effect at such time, a Transaction is consummated
with a third party, introduced directly or indirectly by Sands Brothers, or
the Company enters into a definitive agreement with a third party, which at
any time thereafter results in a Transaction for which Sands Brothers has
provided financial or business advisory services or other services
contemplated by this Agreement, you will pay Sands Brothers a transaction fee
of an amount equal to five (S%) percent of the Consideration paid or payable
in connection with such Transaction in the form that such Consideration is
paid or payable.
C. Financing Transaction
The Company and principal shareholders hereby irrevocably grants Sands
Brothers the right of first refusal to purchase for its own account, or
underwrite or place any Financing Transaction (excluding sales to its
employees and directors) of the Company, or any subsidiary or successor of the
Company, during the term hereof. It is understood that if such a proposed
financing is offered to Sands Brothers, Sands Brothers shall have thirty(30)
days following receipt of such written notice in which to determine
Revision date: 2/18/00
thatlook.com, Inc.
February 18, 2000
Page 5
whether or not to accept such offer. Should Sands Brothers decline such offer,
which is subsequently consummated through a third party, Sands Brothers right
of first refusal with respect to any subsequent offering shall nevertheless
remain in full force and effect during the term hereof. In addition, you
agree if, during the period Sands Brothers is retained by you or, within two
years thereafter, a Financing Transaction is consummated with a third party
financing source ("Financing Source"), or the Company enters into a definitive
agreement with a Financing Source, which at any time thereafter results in a
Financing Transaction, you will pay Sands Brothers a financing fee equal to
the usual and customary fee paid to Sands Brothers for such a transaction of
similar size and structure to that of the Financing Transaction, but in any
event no less than eight (8%) percent of the total consideration paid or
payable in connection with the Financing Transaction exclusive of conventional
bank debt financing which shall be arranged on mutually agreed upon terms.
Said eight percent fee shall only be paid on future financing in the event
that the $5,000,000 financing contemplated is consummated.
Upon execution hereof, it is agreed between the parties hereto that Sands
Brothers shall commence to organize a private placement on behalf of the
Company in an aggregate amount approximating $5,000,000.
Notwithstanding the provisions of this Section C, it is specifically agreed by
the parties to this Agreement that neither this Section C nor any other
section of this agreement shall be applied to a current round of bridge
financing the Company is engaged in, in an amount not to exceed $500,000.
D. Board Designation
Upon consummation of the $5,000,000 financing contemplated herein, and for a
period of three (3) years from the date hereof, the Company will, at Sands
Brothers' option and if so requested by Sands Brothers, recommend and use its
best efforts (which shall include, without limitation, the solicitation of
proxies) to elect a designee of Sands Brothers, which designee shall be Mark
G. Hollo, at the option of Sands Brothers, either as a member of or a
nonvoting advisor to its Board of Directors; such designee, if elected or
appointed, shall attend meetings of the Board and receive no more or less
compensation than is paid to other non-management directors of the Company and
shall be entitled to receive reimbursement for all reasonable costs incurred
in attending such meetings, including, but not limited to, food, lodging and
transportation.
To the extent permitted by law, the Company hereby agrees to indemnify Sands
Brothers and its designee for the actions of such designee as a director of
the Company. In the event the Company maintains a liability insurance policy
affording coverage for
Revision date: 2/18/00
thatlook.com, Inc.
February 18, 2000
Page 6
the acts of its officers and directors, it hereby agrees, if possible, to
include each of Sands Brothers and its designee as an insured under such
policy.
If Sands Brothers does not exercise its option to designate a member of or
advisor to the Company's Board of Directors, Sands Brothers shall nonetheless
have the right to send a representative (who need not be the same individual
from meeting to meeting) to observe each meeting of the Board of Directors. In
addition, whether or not Sands Brothers exercises its rights to designate a
member, advisor or observer, the Company agrees to give Sands Brothers notice
of each such meeting and to provide Sands Brothers with an agenda (including
any materials accompanying or attached to such agenda), minutes of the meeting
and any materials disseminated at the Board of Directors meeting, no later
than it gives such notice and provides such items to the directors.
E. Equity Participation
In consideration of and as a material inducement for Sands Brothers to enter
into this agreement, the Company shall issue, upon execution hereof, to Sands
Brothers and/or its designee(s), 3,000,000 warrants (the "Warrants") to
purchase shares of the Company's Common Stock as follows:
l.) 750,000 Warrants, upon execution hereof.
2.) 2,250,000 on a pro-rata basis up to an aggregate financing of $5,000,000
contemplated herein.
The Warrants will be exercisable for a five year period commencing on the date
hereof (the "Warrant Exercise Term"). The Warrants shall be initially
exercisable at a price per share of Common Stock equal to $2.00 per share of
Common Stock and shall be exercisable at any time and from time to time, in
whole or in part, during the Warrant Exercise Term.
The Warrants shall contain such terms and conditions as are satisfactory in
form and substance to Sands Brothers and its counsel, including, without
limitation, antidilution (except for the $5 million equity capital to be
raised, as contemplated herein), registration provisions, and provisions for
cashless exercise of the Warrants.
>From the earlier of consummation of the $5,000,000 financing contemplated
herein or six months from the date hereof and during the Warrant Exercise
Term, Sands Brothers and/or its designee(s) (or the then holders of a majority
of the Shares underlying the Warrants) shall have the right to require the
Company to prepare and file one new Registration Statement, if then required
under the Securities Act of 1933, as amended (the "Act"), covering all or any
portion of the Warrants and/or the shares of Common Stock underlying the
Warrants (the "Warrant Securities"). The Company shall bear all expenses
incurred in the preparation and filing of such Registration Statement, except
the
Revision date: 2/18/00
thatlook.com, Inc.
February 18, 2000
Page 7
holders of the Warrants shall pay any underwriting discounts or commissions
and the expenses of their own legal counsel.
>From the earlier of consummation of the $5,000,000 financing contemplated
herein or six months from the date hereof at any time during the subsequent
period for a term of five years, the Company shall prepare and file one or
more Registration Statements under the Act, including, (but excluding Form S-4
or successor forms), with respect to a public offering of equity or debt
securities of the Company held by its shareholders or employees and
consultants, the Company will include in any such Registration Statement such
information as may be required to permit a public offering of the Warrants or
the shares of Common Stock underlying the Warrants held by Sands Brothers
and/or its designee(s) as may be requested. The Company shall bear all fees
and expenses incurred by the Company in connection with the preparation and
filing of such Post-Effective Amendment or new Registration Statement. In the
event of such a proposed registration, the Company shall furnish the then
holders of the Warrant Securities with not less than thirty (30) days written
notice prior to the proposed date of filing of such Registration Statement.
Such notice shall continue to be given by the Company to such holders of
outstanding Warrant Securities until such time as all of the Warrant
Securities have been registered. The holders of the Warrant Securities shall
exercise the "piggy-back" rights provided for herein by giving written notice,
within twenty (20) days of the receipt of the Company's notice of its
intention to file a Registration Statement.
F. General
In addition to any fees that may be payable to Sands Brothers under this
agreement, the Company agrees to reimburse Sands Brothers, upon requests made
from time to time, for all of its reasonable out-of-pocket expenses incurred
in connection with its disbursements to its legal counsel pursuant to the
private placement contemplated herein.
In consideration of Sands Brothers' advisory role, the Company agrees to
indemnify and hold harmless Sands Brothers, its affiliates and their
respective officers, directors, employees, agents and controlling persons
(collectively, the "Indemnified Parties"), from and against any losses,
claims, damages and liabilities, joint or several, related to or arising in
any manner out of any transaction, financing, proposal or any other matter
(collectively, the "Matters") contemplated by the engagement of Sands Brothers
hereunder, and will promptly reimburse the Indemnified Parties for all
expenses (including fees and expenses of legal counsel) as incurred in
connection with the investigation of, preparation for or defense of any
pending or threatened claim related to or arising in any manner out of any
Matter contemplated by the engagement of Sands Brothers hereunder, or any
action or proceeding arising therefrom (collectively, "Proceedings"), whether
or not such Indemnified Party is a formal party to any such
Revision date: 2/18/00
thatlook.com, Inc.
February 18, 2000
Page 8
Proceeding. Notwithstanding the foregoing, the Company shall not be liable in
respect of any losses, claims, damages, liabilities or expenses that a court
of competent jurisdiction shall have determined by final judgment resulted
solely from the gross negligence or willful misconduct of an Indemnified
Party. The Company further agrees that it will not, without the prior written
consent of Sands Brothers, settle, compromise or consent to the entry of any
judgment in any pending or threatened Proceeding in respect of which
indemnification may be sought hereunder (whether or not Sands Brothers or any
Indemnified Party is an actual or potential party to such Proceeding), unless
such settlement, compromise or consent includes an unconditional release of
Sands Brothers and each other Indemnified Party hereunder from all liability
arising out of such Proceeding.
The Company agrees that if any indemnification or reimbursement sought
pursuant to this letter were for any reason not to be available to any
Indemnified Party or insufficient to hold it harmless as and to the extent
contemplated by this letter, then the Company shall contribute to the amount
paid or payable by such Indemnified Party in respect of losses, claims,
damages and liabilities in such proportion as is appropriate to reflect the
relative benefits to the Company and its stockholders on the one hand, and
Sands Brothers on the other, in connection with the Matters to which such
indemnification or reimbursement relates or, if such allocation is not
permitted by applicable law, not only such relative benefits but also the
relative faults of such parties to the Company and/or its stockholders and to
Sands Brothers with respect to Sands Brother's engagement shall be deemed to
be in the same proportion as (i) the total value paid or received or to be
paid or received by the Company and/or its stockholders pursuant to the
Matters (whether or not consummated) for which Sands Brothers is engaged to
render financial advisory services bears to (ii) the fees paid to Sands
Brothers in connection with such engagement. In no event shall the Indemnified
Parties contribute or otherwise be liable for an amount in excess of the
aggregate amount of fees actually received by Sands Brothers pursuant to such
engagement (excluding amounts received by Sands Brothers as reimbursement of
expenses).
The Company further agrees that no Indemnified Party shall have any liability
(whether direct of indirect, in contract or tort or otherwise) to the Company
for or in connection with Sands Brothers engagement here under except for
losses, claims, damages, liabilities or expenses that a court of competent
jurisdiction shall have determined by final judgment resulted solely from the
gross negligence or willful misconduct of such Indemnified Party. The
indemnity, reimbursement and contribution obligations of the Company shall be
in addition to any liability which the Company may otherwise have and shall be
binding upon and inure to the benefit of any successors, assigns, heirs and
personal representatives of the Company or an Indemnified Party.
The indemnity, reimbursement and contribution provisions set forth herein
shall remain operative and in full force and effect regardless of (i) any
withdrawal, termination or
Revision date: 2/18/00
thatlook.com, Inc.
February 18, 2000
Page 9
consummation of or failure to initiate or consummate any Matter referred to
herein, (ii) any investigation made by or on behalf of any party hereto or any
person controlling (within the meaning of Section 15 of the Securities Act of
1933, as amended, or Section 20 of the Securities Exchange Act of 1934, as
amended) any party hereto, (iii) any termination or the completion or
expiration of this letter or Sands Brothers' engagement and (iv) whether or
not Sands Brothers' shall, or shall not be called upon to, render any formal
or informal advice in the course of such engagement.
This letter constitutes the entire understanding of the parties with respect
to the subject matter hereof and may not be altered, amended or terminated
except in writing and signed by both parties. This agreement shall be governed
by and construed under the laws of the State of New York without regard to
principles of conflicts of laws thereof and the parties agree to submit
themselves to the jurisdiction of the courts located in the State and County
of New York, which shall be the sole tribunals in which any party may
institute and maintain a legal proceeding against the other party arising from
any dispute hereunder. Neither the execution and delivery of this letter by
the Company nor the consummation of the transactions contemplated hereby will,
directly or indirectly, with or without the giving of notice or lapse of time,
or both: (i) violate any provisions of the Certificate of Incorporation or
By-laws of the Company; or (ii) violate, or be in conflict with, or constitute
a default under, any agreement, lease, mortgage, debt or obligation of the
Company or require the payment, any prepayment or other penalty with respect
thereto. The Company has all requisite power and authority to enter into and
perform its obligations under this letter and to issue and deliver the
Warrants. The execution and delivery of this letter and the Warrants and the
consummation by it of the transactions contemplated hereby and thereby have
been duly authorized by all necessary action on the part of the Company. Each
of this letter and the Warrants constitutes the valid and binding obligations
of the Company, enforceable against the Company in accordance with their
respective terms.
If the foregoing correctly sets forth the terms of our agreement, kindly so
indicate by signing and returning the enclosed copy of this letter.
Very truly yours,
SANDS BROTHERS & CO., LTD.
By:/s/ Mark G. Hollo
-----------------
Mark G. Hollo,
Managing Director
Accepted and Agreed
this 18th day of February:
thatlook.com, Inc.
By: /s/ Gerard A. Powell pres.
---------------------------
Gerard A. Powell
President and Director
Exhibit 10.1.3
2-22-2000 3:40PM FROM AFA 7194733756
Tim C. DeHerrera
137 East Pikes Peak Ave.
Suite 385
Colo. Springs, Ca 80903
779.473-3588,473-3756 fax
February 23, 2000
Mr. Gerard A. Powell, President
thatlook.com
210 West Fourth Street, Suite 101
East Stroudsburg, PA 18301
RE: Introduction/Finders Fee Addendum
Dear Gerry:
I received your proposal dated February 21, 2000 and in response I propose the
following:
It is agreed, that I shall receive a warrant to purchase 280,000 shares of
thatlook.com on identical terms as the Sands Brothers and Co warrant and 2.5%
in cash of the amount received as commission by Sands. This is a change from
the original agreement which called for me to receive 20% (warrants) and 10%
(cash) of the amount to be received by Sands Brothers and Co, Ltd All other
items and conditions in the agreement shall remain the same.
If you are in agreement with the above outlined terms please execute.
Agreed to and accepted this 23rd day of February, 2000:
Tim C. DeHerrera thatlook.com
By /s/ Tim C. DeHerrera By /s/ Gerard A. Powell (CEO)
--------------------- -------------------------
Gerard A,Powell, President
cc: Mark G. Hollo, Sands Brothers & Co
thatlook.com, Inc. and
SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
2000 1999
---- ----
BASIC LOSS PER SHARE:
Net Loss $ (262,496) $ (270,539)
Weighted Average Shares Outstanding 15,930,874 11,009,846
Basic Loss Per Share $(0.02) $(0.02)
Loss per common share is computed based on net loss divided by the weighted
average number of common shares outstanding during the respective periods
presented. Diluted loss per share is not presented since stock options,
warrants and convertible subordinated debenture are anti-dilutive.
Exhibit 11.1
REVIEW REPORT ON INTERIM FINANCIAL STATEMENTS
---------------------------------------------
We have reviewed the accompanying consolidated balance sheet of thatlook.com,
Inc. and Subsidiaries("the Company") as of March 31, 2000 and the related
consolidated statements of operations and cash flows for the three month
period then ended. These consolidated financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying financial statements for them to be in
conformity with generally accepted accounting principles.
As discussed in Note 3 to the financials statements, certain conditions
indicate that the Company may be unable to continue as a going concern. The
accompanying financial statements do not include any adjustments that might be
necessary should the Company be unable to continue as a going concern.
/S/ Lazar Levine & Felix LLP
LAZAR LEVINE & FELIX LLP
New York, New York
May 9, 2000
Exhibit 15.1
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 141,835
<SECURITIES> 0
<RECEIVABLES> 1,645,151
<ALLOWANCES> 173,344
<INVENTORY> 0
<CURRENT-ASSETS> 880,497
<PP&E> 736,354
<DEPRECIATION> 220,121
<TOTAL-ASSETS> 3,010,372
<CURRENT-LIABILITIES> 1,321,404
<BONDS> 3,205,925
0
0
<COMMON> 15,981
<OTHER-SE> (1,532,938)
<TOTAL-LIABILITY-AND-EQUITY> 3,010,372
<SALES> 0
<TOTAL-REVENUES> 928,840
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,052,332
<LOSS-PROVISION> 68,704
<INTEREST-EXPENSE> 70,300
<INCOME-PRETAX> (262,496)
<INCOME-TAX> 0
<INCOME-CONTINUING> (262,496)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (262,496)
<EPS-BASIC> (0.02)
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