<PAGE>
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 Quarter Ended March 31, 2000
OR
[ ]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: 333-86347
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NEWAGECITIES.COM, INC
(Exact Name of Registrant as Specified in its Charter)
Delaware 91-0927532
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State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
1181 South Rogers Circle, Suite 5, Boca Raton, FL 33487
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(Address of Principal Executive Office) (Zip Code)
(954) 766-7800
(Registrant's telephone number including area code)
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 reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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The number of shares of registrant's Common Stock, $.02 par value, outstanding
as of May 15, 2000 was 6,144,158 shares.
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NEWAGECITIES.COM, INC. AND SUBSIDIARIES
FORM 10-QSB
March 31, 2000
INDEX
PAGE
NUMBER
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (Unaudited)
Balance Sheet as of March 31, 2000 2
Statement of Operations for the three-months
ended March 31, 2000 and 1999 3
Statement of Cash Flows for the three-months
ended March 31, 2000 and 1999 4
Notes to Financial Statements 5-6
Item 2. Management's Discussion and Analysis or Plan of Operations 7-8
PART II. OTHER INFORMATION
Item 6. Exhibits and reports on Form 8-K 9
Signatures 10
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NEWAGECITIES.COM, INC.
CONSOLIDATED BALANCE SHEET
MARCH 31, 2000
(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash $ 292,255
Inventories 105,932
Prepaid expenses and other current assets 35,023
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TOTAL CURRENT ASSETS 433,210
FURNITURE AND EQUIPMENT, net 278,527
LICENSING AGREEMENT, net 484,791
GOODWILL, net 5,181,223
DEPOSITS AND OTHER ASSETS 41,148
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$ 6,418,899
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accrued expenses $ 46,163
Loans payable - shareholders 1,908,690
Current portion, capital leases payable 63,319
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TOTAL CURRENT LIABILITIES 2,018,172
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CAPITAL LEASES PAYABLE 108,418
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STOCKHOLDERS' EQUITY:
Common stock, $.02 par value,
45,000,000 shares authorized;
6,144,158 shares issued
and outstanding 122,883
Additional paid-in capital 7,956,208
Accumulated deficit (3,786,782)
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TOTAL STOCKHOLDERS' EQUITY 4,292,309
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$ 6,418,899
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See notes to consolidated financial statements.
2
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NEWAGECITIES.COM, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
January 29,
Three Months 1999 (Inception)
Ended March 31, through
2000 March 31, 1999
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(unaudited) (unaudited)
SALES $ 3,470 $ --
COST OF SALES 2,256 --
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1,214 --
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OPERATING EXPENSES:
Research and development -- --
General and administrative 921,406 100
Noncash compensation expense 493,500 --
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1,414,906 100
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OPERATING LOSS (1,413,692) (100)
INTEREST EXPENSE, net 483,576 --
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NET LOSS $ (1,897,268) $ (100)
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BASIC LOSS PER SHARE OF COMMON STOCK $ (0.53) $ (0.00)
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WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 3,600,158 2,600,158
============== ================
See notes to consolidated financial statements.
3
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NEWAGECITIES.COM, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
January 29,
Three Months 1999(Inception)
Ended March 31, through
2000 March 31, 1999
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(unaudited) (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(1,897,268) $ (100)
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Adjustments to reconcile net loss
to net cash used in operations:
Depreciation and amortization 521,064 --
Common stock issued for services 493,500 --
Common stock issued for interest 490,692 --
Changes in assets and liabilities:
Inventories (8,859) --
Other current assets (22,548) --
Other assets (5,598) --
Accrued expenses (35,947) --
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Total adjustments 1,432,304 --
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NET CASH USED IN OPERATING ACTIVITIES (464,964) (100)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (55,350) --
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NET CASH FLOWS USED IN INVESTING ACTIVITIES (55,350) --
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of capital
stock to be issued -- 380,000
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NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES -- 380,000
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NET INCREASE (DECREASE) IN CASH (520,314) 379,900
CASH - beginning of period 812,569 --
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CASH - end of period $ 292,255 $ 379,900
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Noncash investing and financing activities:
Common stock issued for services $ 493,500 $ --
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Common stock issued for acquisition $ 130,000 $ --
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See notes to consolidated financial statements.
4
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NEWAGECITIES.COM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
BASIS OF PREPARATION:
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial statements and with the instructions to Form 10-QSB and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
disclosures required for annual financial statements. These financial statements
should be read in conjunction with the consolidated financial statements and
related footnotes for the year ended December 31, 1999 included in the Form
10-KSB for the year then ended.
In the opinion of the Company's management, all adjustments (consisting of
normal recurring accruals) necessary to present fairly the Company's financial
position as of March 31, 2000, and the results of operations and cash flows for
the three-month period ended March 31, 2000 and from inception, January 29, 1999
through March 31, 1999 have been included.
The results of operations for the three-month period ended March 31, 2000, are
not necessarily indicative of the results to be expected for the full year. For
further information, refer to the consolidated financial statements and
footnotes thereto included in the Company's Form 10-KSB as filed with the
Securities and Exchange Commission for the year ended December 31, 1999.
No pro-forma results of the operations of the Company and its subsidiary,
MemberNet, as if the acquisition had occurred on January 29, 1999, and for the
period ended March 31, 1999, has been presented since the activity of MemberNet
was immaterial.
ACQUISITION:
On March 24, 2000, the Company acquired all the assets and assumed all of the
outstanding capital lease obligations of Top Dog Video Productions, Inc. for
44,000 shares of the Company's common stock. These shares were valued at the
fair market value of $2.95 per share for an aggregate purchase price of
$130,000. The following table summarizes the acquisition:
Purchase price $ 130,000
Less: Fair market value of assets acquired (153,014)
Liabilities assumed 171,737
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Goodwill $ 148,723
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5
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No pro-forma results of the operations of the Company and its subsidiary, Top
Dog Video Productions, Inc., has been presented sincethe activity of Top Dog
Video Productions, Inc. was immaterial.
STOCKHOLDERS' EQUITY:
On March 9, 2000, three officers/shareholders of the Company and another
shareholder agreed to relinquish 860,000, personally held, shares of the Company
to satisfy a short term loan of $1,041,300. The Company recognized $373,890 of
interest expense in this transaction.
On March 9, 2000 , the same parties gave up 165,000 of their shares to pay two
consultants for services rendered to the Company. Such shares were valued at
$3.00 per share and the Company recorded compensation expense of $493,500.
At March 31, 2000 the Company has a liability to these parties of $1,908,690
representing the value of the unissued shares.
6
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MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The following discussion and analysis should be read in conjunction
with the financial statements of the Company and the notes thereto appearing
elsewhere.
Results of Operations - January 1, 1999 - March 31, 1999 (unaudited)
We generated no revenues during the first quarter ended March 31, 1999.
Operating expenses were $100 for the quarter ended March 31, 1999.
Results of Operations - January 1, 2000 - March 31, 2000 (unaudited)
For the quarter ended March 31, 2000, we generated revenues of $3,470. The cost
of goods sold was $2,256 resulting in a gross profit of $1,214 or 65% of sales
for the quarter ended. Operating expenses were $1,414,906 for the quarter ended.
These expenses consisted mainly of general and administrative expenses of
$921,406 primarily attributable to the amortization of intangible assets, and
noncash compensation of $493,500. Additionally, we recorded net interest expense
of $483,576 which is attributable to convertible notes payable which converted
on March 9, 2000. Comparisons to the same quarter in the preceding year are not
relevant as our operations were immaterial during the first quarter of 1999.
Liquidity, Capital Resources and Plan of Operations
We have financed our growth and cash requirements through borrowings
and contributions from existing shareholders. We do not have any credit
facilities from financial institutions or private lenders other than equipment
leases totaling $171,737, these leases were assumed in the Top Dog Video
Productions, Inc. acquisition. We do not currently have any material commitments
for capital expenditures.
Cash used in operations for the quarter ended March 31, 2000 was
approximately $465,000 attributable primarily to the net loss of approximately
$1,897,000 and increases in inventories and other assets of $37,000, and
decreases in accrued expenses of $36,000 offset by the following noncash
expenses: depreciation and amortization of $521,000, stock issued for services
of $494,000 and interest of $491,000. Cash used in investing activities during
the period was approximately $55,000 which was for leasehold improvements to new
office space and the purchase of computer equipment and software. Total cash
decreased by approximately $520,000 during the quarter.
Since our inception, our goal has been to design and operate a Web
portal focused on providing services and selling goods related to the New Age
market. The term "New Age" refers to a set of beliefs and practices that
originated in past time and includes aromatherapy, astrology, crystal energy,
eastern philosophy, natural health, psychics, UFOs and a host of other topics.
The internet has emerged as one of the fastest growing sectors of the economy
and is becoming a major part of the lives of a greater number of people which
includes a large number of online shoppers. Newagecities.com is creating a Web
site that serves as a doorway or portal to a range of information, products and
services specifically designed with the New Age community in mind. In order to
accomplish our goal, we have created, and continue to develop, a complex
computer network and e-commerce based system which will allow our clients to
receive our services and purchase New Age related products from their personal
computers. We have developed our computer systems and network so that they can
evolve into fully a operating system which will all newagecities.com to provide
services and market its product on a larger scale.
Our goal is to build newagecities.com into a leading online destination
for members of the New Age community. We believe that the execution of this
strategy will help newagecities.com to realize revenue growth through expanded
e-commerce offerings as well as advertising and marketing opportunities. The key
to implementing this strategy requires increasing our membership, building brand
recognition, the continued enhancement of the online features of our Web portal,
maintaining fresh content and integrating new technologies.
7
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In order to continue to implement our business plan, newagecities.com
will need to continue to build strategic alliances with companies that provide
products and services that are important for us to achieve our goals. Based upon
our current sales, anticipated future product sales and cash on hand, we believe
that we may be required to raise additional capital in order to meet our cash
flow needs over the next twelve months. Should revenues not reach projected
levels or should unforeseen events arise, we may be required to secure
additional funds to meet our operating needs sooner than anticipated. Additional
funding may not be available to us on acceptable terms.
8
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PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
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Not applicable
Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
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Not applicable
Item 3. DEFAULTS UPON SENIOR SECURITIES
-------------------------------
Not applicable
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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Not applicable
Item 5. OTHER INFORMATION
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Not applicable
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Exhibits:
Number Description
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27 Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended
March 31, 2000.
9
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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.
NEWAGECITIES.COM, INC. AND SUBSIDIARIES
Date: May 18, 2000 /s/Joseph Ardito Jr.
Chairman of the Board,
Chief Executive Officer and Director
(Principal Executive Officer)
10
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<NAME> NEWAGECITIES.COM, INC
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
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<PP&E> 271,572
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0
0
<COMMON> 122,883
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