United States
Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
[X] Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarterly Period Ended June 30, 1998
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Transition Period From to .
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Commission File Number 1-14025
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Capita Research Group, Inc
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(Exact name of registrant as specified in its charter)
Nevada 88-0072350
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
900 East Eighth Avenue, King of Prussia, Pennsylvania 19406
- ----------------------------------------------------- -----
(Address of principal executive office) (ZIP Code)
Registrant's telephone number, including area code: (610) 768-8070
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed 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 report(s)), and (2) has been subject to such filing
requirements for the past 90 days. Yes No X .
The number of shares outstanding of the registrant's common stock as of July 31,
1998 was 12,692,900.
<PAGE>
Capita Research Group, Inc.
Balance Sheets as of December 31, 1997 and June 30, 1998
(Development Stage Company)
<TABLE>
<CAPTION>
ASSETS
(UNAUDITED)
June 30, December 31,
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Current Assets 1998 1997
-------------- -------- --------
<S> <C> <C>
Cash $ 9,229 $ 15,190
Accounts Receivable 12,027 2,000
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Total Current Assets 21,256 17,190
Equipment
---------
Equipment - Net 97,288 85,083
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Other Assets
------------
Organization costs - net - 19,638
Deposits 7,635 4,928
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Total Other Assets 7,635 24,566
Total Assets $ 126,179 $ 126,839
=========== ===========
LIABILITIES and STOCKHOLDERS' DEFICIENCY
Current Liabilities
-------------------
Accounts payable $ 28,964 $ 82,576
Accrued expenses 124,552 78,432
Notes payable - 60,000
Due to stockholders 100,000 225,791
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Total Current Liabilities 253,516 446,799
Stockholders' Deficiency
------------------------
Common Stock, NextGen Systems, Inc.
$1.00 par value, 3,000,000 shares authorized;
issued & outstanding, 337,435 in 1997 - 337,435
Common Stock, Media Solutions International, Inc.
$.01 par value, 10,000,000 shares authorized;
issued & outstanding, 1,260,100 in 1997 - 12,601
Common Stock, Capita Research Group, Inc.
$0.001 par value, 100,000,000 shares authorized;
issued & outstanding, 12,174,000 in 1998 12,174 -
Additional paid-in capital 1,835,280 532,533
Deficit accumulated during
development stage (1,974,791) (1,202,529)
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Total stockholders' deficiency (127,337) (319,960)
Total Liabilities & Stockholders' Deficiency $ 126,179 $ 126,839
=========== ===========
</TABLE>
See Accompanying notes
<PAGE>
Capita Research Group, Inc.
Statements of Operations for the Three Months Ended
June 30, 1997 and 1998
<TABLE>
<CAPTION>
(UNAUDITED)
Three Months Ended
June 30
1998 1997
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<S> <C> <C>
Revenue $ 38,000 $ 13,991
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Expenses
Research and Development 30,978 292
Salaries and consulting fees 121,066 58,172
Advertising and promotion 200 122
General and administrative 125,930 189,338
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Total expenses 278,174 247,924
Other Income (Expense)
Interest expense (2,629) -
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Total other expense (2,629) -
Net Loss Before Provision for Income Taxes (242,803) (233,933)
Provision for Income Taxes - -
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Net Loss $ (242,803) $ (233,933)
=========== ===========
Net Loss Per Share, Basic and Diluted (0.02) (0.11)
Weighted Average Shares Outstanding 11,431,661 1,927,791
=========== ===========
</TABLE>
See Accompanying notes
<PAGE>
Capita Research Group, Inc.
Statements of Operations for the Six Months Ended
June 30, 1997 and 1998
<TABLE>
<CAPTION>
(UNAUDITED)
Six Months Ended
June 30
1998 1997
----------- -----------
<S> <C> <C>
Revenue $ 38,000 $ 86,804
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Expenses
Research and Development 31,624 6,190
Salaries and consulting fees 435,987 139,508
Advertising and promotion 2,322 2,562
General and administrative 334,129 373,728
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Total expenses 804,062 521,988
Other Income (Expense)
Interest expense (6,200) (1,293)
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Total other expense (6,200) (1,293)
Net Loss Before Provision for Income Taxes (772,262) (436,477)
Provision for Income Taxes - -
----------- -----------
Net Loss $ (772,262) $ (436,477)
=========== ===========
Net Loss Per Share, Basic and Diluted (0.08) (0.11)
Weighted Average Shares Outstanding 9,591,332 1,944,525
=========== ===========
</TABLE>
See Accompanying notes
<PAGE>
Capita Research Group, Inc.
Statements of Cash Flows for the Six Months Ended
(Development Stage Company)
<TABLE>
<CAPTION>
(UNAUDITED)
Six Months Ended
June 30
1998 1997
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Operating Activities
<S> <C> <C>
Net Loss $ (772,262) $ (436,477)
Adjustments to reconcile net loss to
net cash used in operating activities:
Common stock issued for salaries and -
consulting 331,170
Depreciation 10,149 12,982
Writeoff of organization costs 19,638 -
Changes in Operating assets and liabilities:
(Increase) decrease in:
Accounts receivable (10,027) (31,199)
Other assets (2,707) (3,607)
Increase (decrease) in:
Accounts payable & Accrued Expenses (7,491) 327,661
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Net cash used in operating activities (431,530) (130,640)
Investing Activities
Purchase of equipment (22,355) (2,290)
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Net cash used in investing activities (22,355) (2,290)
Financing Activities
Proceeds from issuance of common stock 456,890 214,250
Proceeds from other loans - (8,300)
Repayment of Stockholder loans (8,966) (52,379)
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Net cash provided by financing activities 447,924 153,571
Net Increase ( Decrease) in cash (5,961) 20,641
Cash, Beginning 15,190 639
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Cash, Ending $ 9,229 $ 21,280
=========== ===========
</TABLE>
Supplemental Disclosure of Noncash Financing Activities :
Note Payable converted into common stock $ 60,000.00
Stockholder loans converted into common stock $ 116,825.00
<PAGE>
Capita Research Group, Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations for the Three Months Ended June 30, 1998 and 1997
All statements contained herein that are not historical facts are based upon
current expectations. These statements are forward-looking in nature and involve
a number of risks and uncertainties. Actual results may differ materially. Among
the factors that could cause actual results to differ materially are the
following: the availability of sufficient capital to finance Capita's business
plans, the market acceptance of Capita's services and competitive factors.
Capita wishes to caution readers not to place undue reliance on any such
forward-looking statements, which statements are made pursuant to the Private
Litigation Reform Act of 1995 and as a result, are pertinent only as of the date
made.
As disclosed in Form 10-SB/A filed in July 1998, MSII (a predecessor of Capita
Research) licensed the rights from Media Solutions (a predecessor of Capita
Research) to continue the development and selling of MediaLink. MediaLink is a
software system used by marketers to manage Direct Response Television, "DRTV",
advertising campaigns. During the first three months of 1997 , MSII was actively
engaged in marketing its product and providing technical support to its clients.
As also disclosed in the Form 10-SB/A , during the first three months of 1998,
having previously sold the MediaLink line of business, and having obtained the
rights to commercialize the NASA software, Media Solutions was engaged in
developing and launching a new line of business directed towards advertising and
media copy testing. In addition to validating its testing system for commercial
use, this involved substantial ongoing technical development, creation of
corporate infrastructure, and initiation of a sale solicitation program among
prospective media and advertising company prospects.
For these reasons, substantially all of the material changes from period to
period in the respective Consolidated Statements of Operations for the three
months ended June 30 reflect a basic change of business operations and not a
change in comparable operating results. Accordingly, in the period ended June
30, 1997 Media Solutions and MSII generated revenue of $13,991 from sales of its
MediaLink software product. Total expenses of $247,924 were incurred largely in
connection with system sales and support activities. In the three month period
ended June 30, 1998 Capita Research Group, Inc. "Capita" had sales of $ 38,000
of its copy testing service. This accounts for the entire period-to-period
change in revenue. Similarly, Capita's expenses of $278,174 reflect the
technical development of the product, development of an infrastructure, and the
start-up of testing operations..
<PAGE>
Capita Research Group, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations for the Six Months Ended June 30, 1998 and 1997
As disclosed in Form 10 -SB/A filed in July 1998, MSII (a predecessor of Capita
Research) licensed the rights from Media Solutions (a predecessor of Capita
Research) to continue the development and selling of MediaLink. MediaLink is a
software system used by marketers to manage Direct Response Television, "DRTV",
advertising campaigns. During the first six months of 1997 , MSII was actively
engaged in marketing its product and providing technical support to its clients.
As also disclosed in the Form 10 -SB/A , during the first six months of 1998,
having previously sold the MediaLink line of business, and having obtained the
rights to commercialize the NASA software, Media Solutions was engaged in
developing and launching a new line of business directed towards advertising and
media copy testing. In addition to validating its testing system for commercial
use, this involved substantial ongoing technical development, creation of
corporate infrastructure, and initiation of a sale solicitation program among
prospective media and advertising company prospects.
For these reasons, substantially all of the material changes from period to
period in the respective Consolidated Statements of Operations for the six
months ended June 30 reflect a basic change of business operations and not a
change in comparable operating results. Accordingly, in the period ended June
30, 1997 Media Solutions and MSII generated revenue of $86,804 from sales of its
MediaLink software product. Total expenses of $521,988 were incurred largely in
connection with system sales and support activities. In the six month period
ended June 30, 1998 Capita Research Group, Inc. "Capita" had sales of $ 38,000
of its copy testing service. This accounts for the entire period-to-period
change in revenue. Similarly, Capita's expenses of $804,062 reflect the
technical development of the product, development of an infrastructure, and the
start-up of testing operations. General and administrative expenses include
costs of approximately $105,000 which are attributable to legal, accounting, and
other costs related to the reverse acquisition into Royal American and the
filing of the Form 10-SB/A and the amendment thereto with the SEC.
Liquidity and Capital Resources at June 30, 1998
With start-up losses expected to continue, the Company's ability to sustain
operations is dependent on its ability to raise added investment capital. During
the six months ended June 30, 1998, the Company received cash proceeds of $
456,890 from the sale of common stock. In addition, the company issued common
stock in exchange for loans in the amount of $ 331,170 and $ 176,825
respectively. At June 30, 1998 the financial condition remained impaired with
the working capital shortfall being met by the issuance of common stock. The
above transaction net of the operating loss had the effect of reducing the
stockholder deficit by $192,623 to a deficit of $126,719 at June 30, 1998,
versus a deficit of $319,960 at December 31, 1997.
<PAGE>
Note to Consolidated Financial Statements
The accompanying consolidated financial statements of Capita Research
Group, Inc. and its subsidiary reflect all adjustments and disclosures, which
are, in the opinion of management, necessary for a fair presentation of interim
results. The financial information has been prepared in accordance with Capita's
customary accounting practices and has not been audited.
Certain information and footnote disclosures required under generally
accepted accounting principles have been condensed or omitted pursuant to the
Securities and Exchange Commission (SEC) rules and regulations. The preparation
of financial statements in conformity with generally accepted accounting
principles requires management to make certain estimates and assumptions that
affect the amount reported in the financial statements and accompanying notes.
Actual results could differ from those estimates. These interim financial
statements should be read in conjunction with Management's Discussion and
Analysis of Financial Condition and Results of Operations and the financial
statements and notes thereto included in Capita's Form 10-SB/A for the year
ended December 31, 1997.
Results of operations for the six-month period ended June 30, 1998, are not
necessarily indicative of the results to be expected for the full year.
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
CAPITA RESEARCH GROUP, INC.
Registrant
Dated: August 14, 1998 /s/ David B. Hunter
---------------------- -------------------
David B. Hunter
President and
Chief Executive Officer
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