<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the quarterly period ended March 31, 1999
--------------
Commission file number 000-24835
---------
PTN Media, Inc.
- --------------------------------------------------------------------------------
(Exact name of Small Business Issuer as Specified in Its Charter)
Delaware 38-3399098
- --------------------------------------------- --------------------------------
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
2750 South State Street, Ann Arbor, Michigan 48104
- --------------------------------------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code (734) 327-0579
--------------
Check whether the issuer: (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes
of common equity, as of March 31, 1999: 3,440,262
---------
Transitional Small Business Disclosure Format (check one):
Yes No X
----- -----
<PAGE>
PTN MEDIA, INC.
---------------
INDEX
-----
Page(s)
-------
PART 1. Financial Information
ITEM 1. Financial Statements
Condensed Balance Sheets as of March 31, 1999
(unaudited) and December 31, 1998 3
Statements of Operations for the Three Month
Periods Ended March 31, 1999 and 1998 and for
the Cumulative Period From May 27, 1997
(Inception) to March 31, 1999 (Unaudited) 4
Statements of Cash Flows for the Three Month
Periods Ended March 31, 1999 and 1998 and for
the Cumulative Period During the Development
Stage from May 27, 1997 (Inception) to March
31, 1999 (Unaudited) 5
Notes to Interim Condensed Financial
Statements 6
Management's Plan of Operation 9
PART II Other Information
ITEM 1. Legal Proceedings 12
ITEM 2. Change in Securities 12
ITEM 3. Defaults Upon Senior Securities 12
ITEM 4. Submission of Matters to a Vote of Security Holders 12
ITEM 5. Other Information 12
ITEM 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
Exhibit 27.1 - Financial Data Schedule
<PAGE>
PART I. Financial Information
ITEM 1. Financial Statements
PTN MEDIA, INC.
---------------
(a Development Stage Company)
CONDENSED BALANCE SHEETS
------------------------
- ASSETS -
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
------------------ ------------
(unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash $ 62,171 $ 702
Accounts receivable - 4,488
------------------ ------------
TOTAL CURRENT ASSETS 62,171 5,190
FIXED ASSETS - NET 4,435 3,626
OTHER ASSETS:
Security deposits 690 690
--------------- -------------
$ 67,296 $ 9,506
=============== =============
- LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) -
CURRENT LIABILITIES:
Accrued expenses $ 144,940 $ 133,815
License fees payable 100,000 255,000
Short-term loans payable (Note 3) 331,250 56,250
Loans payable - officer (Note 4) 511,600 542,500
--------------- -------------
TOTAL CURRENT LIABILITIES 1,087,790 987,565
--------------- -------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY (DEFICIT) (Note 2):
Preferred stock, par value $.01; 1,000,000 shares authorized,
none issued or outstanding - -
Common stock, par value $.001; 10,000,000 shares authorized,
3,440,262 and 3,378,262 shares issued and outstanding for
1999 and 1998, respectively 3,440 3,378
Additional paid-in capital 1,721,340 1,608,910
Deficit accumulated during the development stage (2,745,274) (2,590,347)
--------------- -------------
(1,020,494) (978,059)
--------------- -------------
$ 67,296 $ 9,506
=============== =============
</TABLE>
See notes to interim condensed financial statements.
3
<PAGE>
PTN MEDIA, INC.
---------------
(a Development Stage Company)
CONDENSED STATEMENTS OF OPERATIONS
----------------------------------
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended Cumulative During
March 31, The Development Stage
------------------------------- May 27, 1997 to
1999 1998 March 31, 1999
--------------- ------------- ---------------------------
<S> <C> <C> <C>
REVENUES $ 9,332 $ - $ 13,820
----------- --------------- --------------
EXPENSES:
Cost of revenue 13,923 50,000 1,742,651
Product development 60,000 104,815 542,088
General and administrative 77,211 72,994 431,875
----------- --------------- --------------
151,134 227,809 2,716,614
----------- --------------- --------------
LOSS FROM OPERATIONS (141,802) (227,809) (2,702,794)
----------- --------------- --------------
OTHER INCOME (EXPENSE):
Interest expense (13,125) (5,730) (42,519)
Interest income - 22 39
----------- --------------- --------------
(13,125) (5,708) (42,480)
----------- --------------- --------------
NET LOSS $(154,927) $(233,517) $(2,745,274)
=========== =============== ==============
BASIC LOSS PER COMMON SHARE (Note 5) $(.05) $(.08) $(.89)
===== ===== =====
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING (Note 5) 3,399,618 2,967,348 3,071,041
=========== =============== ==============
See notes to interim condensed financial statements.
</TABLE>
4
<PAGE>
PTN MEDIA, INC.
---------------
(a Development Stage Company)
CONDENSED STATEMENTS OF CASH FLOWS
----------------------------------
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended Cumulative During
March 31, The Development Stage
------------------------------- (May 27, 1997 to
1999 1998 March 31, 1999)
--------------- ------------- ------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS:
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (154,927) $ (233,517) $(2,745,274)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation of fixed assets 331 183 1,211
Shares issued for legal fees - - 14,000
Waiver of compensation payable - - 66,000
Issuance of shares for license fees - - 1,078,728
Changes in operating assets and liabilities:
Decrease in accounts receivable 4,488 - -
Increase in accrued expenses 11,125 10,525 194,940
Increase (decrease) in license fees payable (155,000) 100,000 100,000
--------------- ------------- -----------
Net cash (used) by operating activities (293,983) (122,809) (1,290,395)
--------------- ------------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets (1,140) - (5,646)
Security deposits paid - - (690)
--------------- ------------- -----------
Net cash (used) by investing activities (1,140) - (6,336)
--------------- ------------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Loans received from officer - - 542,500
Loans repaid to officer (30,900) - (30,900)
Proceeds from short-term loans 275,000 104,000 493,750
Payment from shareholders - - 2,957
Net proceeds from initial public offering 112,492 - 350,595
--------------- ------------- -----------
Net cash provided by financing activities 356,592 104,000 1,358,902
--------------- ------------- -----------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 61,469 (18,809) 62,171
Cash and cash equivalents, at beginning of period 702 20,134 -
--------------- ------------- -----------
CASH AND CASH EQUIVALENTS, AT END OF PERIOD $ 62,171 $ 1,325 $ 62,171
=============== ============= ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Interest paid - - -
Taxes paid - - -
</TABLE>
See notes to interim condensed financial statements.
5
<PAGE>
PTN MEDIA, INC.
---------------
(a Development Stage Company)
NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS
-----------------------------------------------
(Unaudited)
NOTE 1 - DESCRIPTION OF COMPANY AND GOING CONCERN UNCERTAINTY:
PTN Media, Inc., the Company, was incorporated in Delaware on January
13, 1998 and is the successor to Interactive Entertainment Studio,
Inc. (IES). IES was incorporated in the State of Nevada on May 27,
1997 and was merged into the Company in March 1998, for the sole
purpose of changing the domicile of the Company to Delaware. The
Company has been in the development stage in accordance with Statement
of Financial Accounting Standards No. 7, since its inception.
The Company is an interactive content provider focusing on providing
leading branded content for well-defined target audiences using a
combination of new and traditional media. The Company provides this
content on its interactive web sites in the form of articles and
photographs pertaining to fashion, beauty, style and entertainment.
These web sites, utilizing celebrity models as hosts, will provide an
avenue for users to share general tips and advice relating to the
subjects covered.
The Company, since its inception, has incurred net losses of
$2,745,274 and at March 31, 1999 current liabilities exceeded current
assets by $1,025,619. The Company has relied on bridge financing and
the proceeds from the sale of common stock through an initial public
offering to fund its activities. The Company may be unable to continue
in existence unless it is able to arrange additional financing. The
financial statements do not include any adjustments relating to the
recoverability of assets that might be necessary in the event the
Company cannot continue in existence.
The accounting policies followed by the Company are set forth in Note
2 to the Company's financial statements included in its annual report
on Form 10-KSB for the year ended December 31, 1998 and which is
incorporated herein by reference. Specific reference is made to this
report for a description of the Company's securities and the notes to
the financial statements included therein.
In the opinion of management, the accompanying unaudited interim
condensed financial statements of PTN Media, Inc. contain all
adjustments necessary to present fairly the Company's financial
position as of March 31, 1999 and the results of its operations for
the three month periods ended March 31, 1999 and 1998 and for the
cumulative period during the development stage (May 27, 1997 to March
31, 1999) and its cash flows for the three month periods ended March
31, 1999 and for the cumulative period during the development stage
(May 27, 1997 to March 31, 1999).
The results of operations for the three month periods ended March 31,
1999 and 1998 are not necessarily indicative of the results to be
expected for the full year.
6
<PAGE>
PTN MEDIA, INC.
---------------
(a Development Stage Company)
NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS
-----------------------------------------------
(Unaudited)
NOTE 2 - PUBLIC OFFERING:
On September 18, 1998, the Securities and Exchange Commission declared
effective the Company's registration statement concerning an initial
public offering ("IPO") of 400,000 shares of common stock. On October
22, 1998, the Company extended the expiration date of the initial
public offering to January 31, 1999. As of December 31, 1998, the
Company had consummated the sale of 66,900 shares of common stock and
in February 1999, the Company consummated the sale of an additional
62,000 shares of common stock. The aggregate net proceeds from the IPO
was $350,595.
NOTE 3 - SHORT-TERM LOANS PAYABLE:
In July and August 1997, the Company received $56,250 through the
issuance of 8% promissory notes and common stock purchase warrants to
acquire Company stock. The 45,000 warrants issued, which expire in
July 2001, entitle the holders to purchase 45,000 shares of common
stock at an exercise price of $3.00 per share, the deemed fair value
of the warrants at the time of issuance. The notes and accrued
interest are payable one year from the date of issuance or the closing
of an equity funding of the Company for a minimum of $500,000,
whichever is sooner. These notes continue to be outstanding
notwithstanding the fact that payments owed by the Company thereunder
are now past due. Interest accrued and unpaid as of March 31, 1999 and
December 31, 1998, aggregate $5,625 and $4,500, respectively.
In March 1999, the Company received $275,000 from the sale of 5 1/2
units, each unit consisting of a $50,000 promissory note, bearing
interest at 10% per annum, and two year warrants to purchase 10,000
shares of common stock at $7.50 per share.
NOTE 4 - LOANS PAYABLE - OFFICER:
In April 1998, the Company's Chairman, President and Chief Executive
Officer, provided the Company with a revolving credit line with a
maximum of $500,000 available. In September 1998, the Board of
Directors of the Company authorized an increase in this line to
$610,000 and in November and December 1998, a further increase to
$1,000,000, was authorized. Loans drawn under this line bear interest
at a rate of 9% per annum from the date they are made to the Company
and are payable by May 2001, provided, however, that if the Company
raised gross proceeds in the IPO of at least $1,500,000, the entire
outstanding amount and accrued interest will be repaid from the
proceeds from the IPO. As of December 31, 1998, borrowings outstanding
under this line aggregated $542,500, and interest accrued and unpaid
aggregated $22,644.
In March 1999, the Company repaid $30,900 of such loans. Accrued
interest as of March 31, 1999 aggregated $34,644.
7
<PAGE>
PTN MEDIA, INC.
---------------
(a Development Stage Company)
NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS
-----------------------------------------------
(Unaudited)
NOTE 5 - EARNINGS (LOSS) PER SHARE:
Earnings (loss) per share has been computed on the basis of the
weighted average number of common shares outstanding during each
period presented according to the standards of SFAS No. 128 "Earnings
Per Share" ("SFAS 128"). In accordance with the rules of the
Securities and Exchange Commission for initial public offerings, all
shares issued within one year of filing are being treated as
outstanding for all periods presented.
8
<PAGE>
MANAGEMENT'S PLAN OF OPERATIONS:
PTN Media, Inc., the Company, is an interactive content provider
focusing on providing leading branded content for well-defined target
audiences using a combination of new and traditional media. The
Company provides this content on its interactive web sites in the form
of articles and photographs pertaining to fashion, beauty, style and
entertainment. These web sites, utilizing celebrity models as hosts,
will provide an avenue for users to share general tips and advice
relating to the subjects covered.
The Company, since its inception, has incurred net losses of
$2,745,274 and at March 31, 1999, current liabilities exceeded current
assets by $1,025,619. The Company may be unable to continue in
existence unless it is able to arrange additional financing to
supplement its recently completed initial public offering and bridge
financing.
The Company has not yet generated any significant revenues and is
still considered in the development stage. Through March 31, 1999,
cumulative revenues totaled $13,820, and resulted entirely from the
sale of calendars (see discussion below re: Claudia Schiffer Calendar
Agreement). The Company continues to incur costs associated with the
development of its proposed web sites, none of which is at yet fully
constructed.
Overview:
Although the Company entered into an agreement with a company
controlled by fashion model, Niki Taylor, in June 1997, for Ms. Taylor
to host"Fashion House with Niki Taylor", on the Company's initial web
site, this web site was not launched until recently. The Company was
not able to launch the web site sooner, due to the period of time
required to raise the funds necessary to develop the site and commence
operations, the approximate cost of which was $250,000, not including
the advance of $150,000 paid to Ms. Taylor's company.
The Company's initial web site currently offers four content areas,
including fashion tips from Ms. Taylor, the latest style and trends in
the fashion industry, travel information, photographs of Ms. Taylor
and video and audio clips and information. For the next twelve months
the Company will expand its content offerings on the "Fashion House
with Niki Taylor" web site by updating editorial coverage of beauty,
fashion, style and models, as well as the introduction of new video
and audio items. The Company also will continue to add more
advertising and other sources of revenue to its site. The Company's
license agreement with Niki Taylor's company expired on September 30,
1998 and was renewed for a twelve-month term. The agreement contains
an automatic renewal provision for an additional twelve month term,
unless terminated by Ms. Taylor's company or the Company. The
agreement with Ms. Taylor is currently being reviewed by the parties
due to the Company's inability to meet its current obligations
thereunder. The Company and Ms. Taylor are discussing a possible
amendment to the agreement to reduce the Company's obligations to Ms.
Taylor and to reduce her commitments to the Company, especially
regarding her personal appearances.
Additionally, the Company has advanced $134,000 to a company
controlled by fashion model, Tyra Banks, pursuant to certain
agreements between the Company and Ms. Banks' company and has also
incurred expenses of approximately $10,000, to date, in connection
with the development of the intended web site to have been hosted by
Ms. Banks and in connection with the development of calendars
featuring her. In June 1998, Ms. Banks declared the Company in breach
of these agreements based on the Company's alleged failure to pay the
full amount of all advances and reimbursable expenses allegedly owed
pursuant to such agreements. The agreement relating to the creation
and sale of calendars has been terminated. Although Ms. Banks also
claims that the web site agreement has been terminated, the Company
believes that it is currently in full compliance with this agreement,
and that Ms. Banks has refused to perform thereunder. On December 8,
1998, attorneys for Ms. Banks made a demand for arbitration against
the Company alleging that the Company failed to make timely payments
of monies due under the two executed agreements, and refused to return
certain materials to Ms. Banks. Ms. Banks is seeking payment of
$153,000 (which amount is recorded as a liability on the financial
statements) plus interest, as well as damages for injury to her public
reputation. On January 15, 1999, the Company through its attorneys,
filed an Answer and Counterclaim to Ms. Banks' Demand for Arbitration.
The Company raised several defenses to Ms. Banks' claims and claimed
a breach by Ms. Banks and Bankable, Inc. of the Web Site Agreement. A
preliminary administrative conference was held on January 19, 1999 and
a hearing was scheduled for April 23, 1999. The hearing scheduled for
April 23, 1999 has been moved to June 15, 1999 due to Ms. Banks'
inability to appear in April due to a prior commitment to film a
motion picture in Canada. The
9
<PAGE>
Company is seeking the return of $100,000, plus interest, which was
paid to Ms. Banks. The Company intends to vigorously defend itself in
this arbitration, and believes that it has meritorious defenses.
However, there can be no assurance that the Company will be successful
in this arbitration and an unfavorable result could have a material
adverse effect on the Company.
The Company entered into a Web Site License Agreement with Claudia
Schiffer (the "Schiffer License Agreement") which grants the Company
the exclusive license for an on-line Internet service devoted to Ms.
Schiffer. The Company has the right to use Ms. Schiffer's name and
likeness for an Internet site including a merchandise "boutique",
monthly column and interviews or on-line chat sessions. Ms. Schiffer
also would make promotional appearances and voice recordings to
promote the site and provide content for it. The Schiffer License
Agreement would continue until the year 2001. The Company would pay
Ms. Schiffer guaranteed minimum royalties of $300,000 for the first
year (which amount has been paid as of March 31, 1999) of the Schiffer
License Agreement, $400,000 for the second year, and $500,000 for the
third year, which would be credited against earned royalties ranging
from 25% to 80% of site revenues and profits from boutique merchandise
sales.
The Schiffer License Agreement also granted to Ms.Schiffer, 269,682
shares of common stock (the "Shares"), with the right to maintain the
ratio of her common stock ownership to that of the Company's
President. The Company agreed to indemnify Ms. Schiffer for any U.S.
income tax liability resulting from the issuance of these shares,
however, the Company has been assured that Ms. Schiffer is not a U.S.
citizen or resident, and therefore is not likely to be responsible for
any such taxes.
The Company has also entered into a Licensed Calendar Agreement with
Ms. Schiffer ("Calendar Agreement"). The Calendar Agreement grants the
Company the right to use the name, likeness, and endorsement of Ms.
Schiffer in the advertisement, promotion and sale of a16-month 1999
calendar with photographs of her, in downloadable electronic format
and CD-Rom ("Licensed Calendar"). Ms. Schiffer will provide
photographic images and voice recordings for the Licensed Calendar.
The Company agreed to pay Ms. Schiffer an advance royalty in the
aggregate amount of $75,000 which was paid in 1998. The Company has
also agreed to pay to Ms. Schiffer royalties equal to a percentage of
sales ranging from 20% of net sales for 0-20,000 units, to 60% of net
sales for 50,001 units and above. This advance payment will be
credited against any earned royalty payment. The Calendar Agreement
terminates December 31, 1999.
The Company also hopes to launch "www.fragrancedirect.com," its online
fragrance sales effort, within the next 12 months. On this web site
the Company will sell colognes, perfumes and other fragrances direct
to Internet users, much in the same way that books are sold on web
sites such as "Amazon.com." The site will be promoted through
hyper-links from the Company's affiliated web sites. The Company also
intends to create mutual linking arrangements with operators of
apparel sites and to make barter arrangements for advertising. The
Company anticipates that its prices will be lower than the
manufacturer's suggested retail prices, however, not necessarily less
than all retail outlets. The web site is currently being tested. The
web site was built and will be maintained by an outside contractor
whom the Company agreed to pay a $3,000 one-time fee, $299 per month
maintenance and 5% of gross sales from the site with a $50,000 per
year cap. The outside contractor will process credit card orders.
The Company intends to obtain product liability insurance in such
amounts as it may deem appropriate to insure against any possible
product liability exposure resulting from the sale of fragrances on
the web site.
There can be no assurance that the Company will generate substantial
revenues from the web site. In addition, the Company is aware of at
least two similar web sites attempting to compete for the on-line
fragrance business.
10
<PAGE>
Cash Requirements:
In April 1998, the Company's Chairman, President and Chief Executive
Officer, provided the Company with a revolving credit line with a
maximum of $500,000 available. In September 1998, the Board of
Directors of the Company authorized an increase in this line to
$610,000 and in November and December 1998, further increases to
$1,000,000, were authorized. Loans drawn under this line bear interest
at a rate of 9% per annum from the date they are made to the Company
and are payable by May 2001, provided, however, that if the Company
raises gross proceeds in the IPO of at least $1,500,000, the entire
outstanding amount and accrued interest will be repaid from the
proceeds from the IPO. As of December 31, 1998, borrowings outstanding
under this line aggregated $542,500. In March 1999, the Company repaid
$30,900 of these loans and as of March 31, 1999, the outstanding loan
balance was $511,600 and interest accrued and unpaid amounted to
$34,644.
On September 18, 1998, the Securities and Exchange Commission declared
effective the Company's Registration Statement concerning an Initial
Public Offering ("IPO") of 400,000 shares of common stock, which the
Company hoped would generate net proceeds of approximately $1,600,000.
This IPO expired on January 31, 1999. As of December 31, 1998, the
Company had completed the sale of 66,900 shares of common stock and in
February 1999, closed on the sale of an additional 62,000 shares of
common stock, realizing aggregate net proceeds of $350,595. The net
proceeds from this offering, along with bridge loans received in 1997,
have been used to satisfy the Company's obligations under the License
Agreements entered into with the fashion models.
In March 1999, the Company completed the sale of 5.5 units, each unit
consisting of a $50,000 promissory note, bearing interest at an annual
rate of 10%, and warrants to purchase 10,000 shares of common stock at
$7.50 per share.
Since the Company raised less than the estimated maximum amount of net
proceeds available pursuant to the Initial Public Offering, the
Company has insufficient funds available for operations and will be
required to seek additional financing sooner than anticipated or
curtail certain of its planned activities. The Company may determine,
depending on the opportunities available to it, to seek additional
equity or debt financing to fund the cost of its operations. There can
be no assurance that additional financing will be available to the
Company on commercially reasonable terms, or at all. In the event that
the Company is unable to raise additional funds, the Company would be
required to either substantially reduce or terminate its operations.
11
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
On December 8, 1998, attorneys for Tyra Banks and Bankable, Inc.,
an entity controlled by Ms. Banks, made a Demand for Arbitration
against the Company under the Commercial Arbitration Rules of the
American Arbitration Association. Ms. Banks' attorneys alleged
that the Company failed to make timely payments of money due upon
the execution the Web Site License Agreement and Calendar
Agreement between Ms. Banks and the Company ("Agreements"), and
refused to return photographs, pictures, prints, negatives and
images of Ms. Banks. Ms. Banks is seeking the amount of $153,000,
plus interest, allegedly owed to her, to have the Company not use
her name, picture and likeness, and to have all images of Ms.
Banks, in any form, returned to her. She also is seeking damages
for injury to her public reputation, lost royalties and the cost
of attorney's fees. On January 15, 1999, the Company through its
attorneys, filed an Answer and Countercalim to Ms. Banks' Demand
for Arbitration. The Company raised several defenses to Ms.
Banks' claims and claimed a breach by Ms. Banks and Bankable,
Inc. of the Web Site Agreement. The Company is seeking the amount
of $100,000, plus additional damages, relating to the advance
payment made by the Company to Bankable, Inc. A preliminary
administrative conference was held on January 19, 1999, and a
hearing was scheduled for April 23, 1999. The hearing scheduled
for April 23, 1999 has been moved to June 15, 1999 due to Ms.
Banks' inability to appear in April due to a prior commitment
to film a motion picture in Canada. Both parties have also
expressed an interest in resolving this matter through mediation.
Mediation would run concurrently with the arbitration process,
prior to the arbitration hearing. The Company intends to
vigorously defend itself in this arbitration, and believes that
it has meritorious defenses. Nonetheless, there can be no
assurance that the Company will be successful in this
arbitration, and an unfavorable settlement or result in this
matter could have a material adverse effect on the Company.
ITEM 2. Changes in Securities
Not Applicable
ITEM 3. Defaults Upon Senior Securities
In July and August 1997, the Company received $56,250 through the
issuance of 8% promissory notes. The promissory notes and
accrued interest are payable one year from the date of issuance
or the closing of an equity funding of the Company for a minimum
of $500,000, whichever is sooner. These promissory notes in the
aggregate principal amount of $56,250 are now past due. Interest
accrued and unpaid as of March 31, 1999 and December 31, 1998,
aggregate $5,625 and $4,500, respectively.
ITEM 4. Submission of Matters to a Vote of Security Holders
Not Applicable
ITEM 5. Other Information
Not Applicable
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27.1 - Financial Data Schedule
(b) Reports on Form 8-K
None
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused the Report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: May 25, 1999 PTN Media, Inc.
By: /s/ Peter M. Klamka
----------------------------
Peter M. Klamka,
Chief Financial and Principal
Accounting Officer,
Chairman, President,
Secretary and Chief Executive
Officer
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
consolidated financial statements for the three months ended March 31, 1999 and
is qualified in its entirety by reference to such statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 62,171
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 62,171
<PP&E> 5,646
<DEPRECIATION> 1,211
<TOTAL-ASSETS> 67,296
<CURRENT-LIABILITIES> 1,087,790
<BONDS> 0
3,440
0
<COMMON> 0
<OTHER-SE> (1,023,934)
<TOTAL-LIABILITY-AND-EQUITY> 67,296
<SALES> 9,332
<TOTAL-REVENUES> 9,332
<CGS> 13,923
<TOTAL-COSTS> 13,923
<OTHER-EXPENSES> 137,211
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,125
<INCOME-PRETAX> (154,927)
<INCOME-TAX> 0
<INCOME-CONTINUING> (154,927)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (154,927)
<EPS-BASIC> (.05)
<EPS-DILUTED> (.05)
</TABLE>
