U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES AND EXCHANGE ACT OF 1934 for the Quarterly
period 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 _______.
Commission File Number: 0-27161
-----------------------------------
PAYFORVIEW.COM CORP.
(Exact name of registrant as specified in its charter)
Nevada, U.S.A. 91-1976310
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
509 Madison Avenue, 16th Floor, New York, New York 10022
(Address of principal executive offices)
(212) 605-0150
(Issuer's telephone number, including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the registrant (1) filed all reports required to be
filed by Section 13 or 15 (d) of the Exchange Act during the past
12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES [X] NO [ ]
As of March 31, 2000: 57,577,727 shares of the Company's
Common Stock were issued and outstanding.
<PAGE>
TABLE OF CONTENTS AND INFORMATION REQUIRED IN REPORT
Part I. Financial Information
-------
Item 1. Financial Statements (unaudited)
Item 2. Managements Discussion and Analysis or Plan of
Operation
Part II. Other Information
--------
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security holders
Item 5. Other Information
Item 6. Exhibits and reports on form 8-K
SIGNATURES
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS
C O N T E N T S
Page
Condensed Consolidated Balance Sheets F-2
Condensed Consolidated Statements of Operations F-3
Condensed Consolidated Statement of Changes
in Stockholders' Equity F-4 - F-5
Condensed Consolidated Statements of
Cash Flows F-6
Notes to Condensed Consolidated
Financial Statements F- 7 - F-11
<PAGE> F-1
<PAGE>
<TABLE>
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
CONDENSED CONSOLIDATED BALANCE SHEETS
<S> <C> <C>
December 31, March 31,
ASSETS 1999* 2000
(unaudited)
Current assets
Cash and cash equivalents $ 342,004 $ 4,155,271
Prepaid expenses 63,602 152,826
Due from related parties - 18,078
----------- ------------
405,606 4,326,175
Fixed assets, net 351,780 381,776
Investment in Street Solid Records 10,000 10,000
Intangible assets, net 39,169 34,274
Capitalized website development costs 86,898
Other assets - 177,840
----------- ------------
$ 806,555 $ 5,016,963
=========== ============
LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIENCY)
Current liabilities
Accounts payable $ 261,368 $ 86,507
Liabilities from discontinued
operations 256,000 198,000
Loan payable 1,050,151 1,050,151
----------- ------------
1,567,519 1,334,658
----------- ------------
Other Liabilities 222,500 -
2% Series a Senior Convertible
Redeemable Debentures 172,500 -
Stockholders' equity (deficiency)
Common stock
Authorized, 100,000,000 common
shares with a par value of $0.0001;
issued and outstanding, 4,327,131
and 43,397,727 and 57,577,727
Shares, respectively 4,340 5,759
Additional paid-in capital 8,594,637 17,694,449
Deficit, accumulated during the
development stage (9,754,941) (14,017,903)
----------- ------------
(1,155,964) 3,682,305
----------- ------------
$ 806,555 $ 5,016,963
=========== ============
*Derived from audited financial statements.
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE> F-2
<TABLE>
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<S> <C> <C> <C>
Cumulative
amounts from
April 6, 1998
March 31, (inception) to
--------------------------- March 31,
1999 2000 2000
------------ ------------ -------------
(unaudited) (unaudited)
Costs and expenses
Selling, general and administrative
Expenses $ 310,433 $ 4,289,458 $ 6,805,083
Amortization of licenses and
Goodwill 120,534 6,799 369,102
Loss on impairment 2,821,500 - 4,247,022
Interest expense 1,462 - 348,631
Interest income - (33,295) (33,295)
----------- ----------- ------------
Total costs and expenses 3,253,929 4,262,962 11,736,543
----------- ----------- ------------
Loss from continuing operations (3,253,929) (4,262,962) (11,736,543)
----------- ----------- ------------
Discontinued operations (Street
Solid Records)
Loss from operations (140,401) - (1,056,167)
Loss on disposal - - (1,225,193)
----------- ----------- ------------
NET LOSS $(3,394,330) $(4,262,962) $(14,017,903)
=========== =========== ============
Basic and diluted loss per share:
Continuing operations $ (.23) $ (.08) $ (.58)
Discontinued operations (.01) - (.12)
----------- ----------- ------------
Basic and diluted loss per share $ (.24) $ (.08) $ (.70)
=========== =========== ============
Weighted-average shares outstanding 14,206,121 53,780,254 20,142,353
=========== =========== ============
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE> F-3
<TABLE>
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Years ended December 31, 1999 and 1998 and three months ended March 31, 2000 (unaudited)
<S> <C> <C> <C> <C> <C>
Deficit,
accumulated
Common Stock issued Additional during the
--------------------- paid-in development
Number Amount capital stage Total
---------- ------ ---------- ----------- -----------
Balance,
April 6, 1998 - $ - $ - $ - $ -
Capital stock of Voyager
International
Entertainment Inc.
issued for services 3,800,000 380 37,620 - 38,000
Capital stock of Voyager
International
Entertainment Inc.
issued for acquisition
of Voyager Film
Sales Inc. 200,000 20 180 - 200
Capital stock of Voyager
International Entertainment
Inc. issued for cash 327,131 33 112,459 - 112,492
Net loss (275,528) (275,528)
---------- ------ ---------- ----------- -----------
Balance,
December 31, 1998 4,327,131 433 150,259 (275,528) (124,836)
Capital stock of
Payforview.com Corp.
at January 5, 1999 3,750,000 375 625 - 1,000
Issuance of shares for
acquisition of
Voyager International
Entertainment Inc. 7,788,840 779 781 1,560
Issuance of shares for
acquisition of
Voyager International
Entertainment, Inc. for
potential commission 1,500,000 150 (150) -
Cancellation of
Voyager shares (4,327,131) (433) 433 -
Issuance of shares for
acquisition of Squadron
One Records and creation
of Street Solid
Records, Inc. 1,173,509 117 1,598,163 1,598,280
Issuance of shares for
acquisition of
licenses and rights 1,102,500 110 3,067,290 3,067,400
Issuance of shares for
services 122,000 12 77,824 77,836
Issuance of shares for
consulting services 1,800,000 180 652,320 652,500
Issuance of shares for
consulting services 333,333 33 49,967 50,000
Issuance of shares for
financial advisor
services 1,800,000 180 1,386,696 1,386,876
Issuance of shares for
acquisition of Software 200,000 20 291,980 292,000
Issuance of shares for
advertising 200,000 20 59,980 60,000
Issuance of shares upon
conversion of debt 22,837,005 2,284 825,216 827,500
Allocation of proceeds
of convertible debt to
additional paid-in capital 333,333 333,333
Issuance of shares
for cash 540,540 55 99,945 100,000
Shares held in escrow
with attorney relating
to debentures 250,000 25 (25)
Net loss (9,479,413) (9,479,413)
---------- ------ ---------- ----------- -----------
Balance,
December 31, 1999 43,397,727 $4,340 $8,594,637 $(9,754,941) $(1,155,964)
========== ====== ========== =========== ===========
</TABLE>
<PAGE> F-4
<TABLE>
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (continued)
Years ended December 31, 1999 and 1998 and three months ended March 31, 2000 (unaudited)
<S> <C> <C> <C> <C> <C>
Deficit,
accumulated
Common Stock issued Additional during the
--------------------- paid-in development
Number Amount capital stage Total
---------- ------ ---------- ----------- -----------
Issuance of shares for
cash, net of share
issuance costs
(unaudited) 2,800,000 $ 280 $4,166,220 $ - $ 4,166,500
Issuance of shares for
cash (unaudited) 810,000 81 1,214,919 - 1,215,000
Issuance of shares for
convertible debt
(unaudited) 6,900,000 690 171,810 - 172,500
Shares issued to
officers and consultants
for services (unaudited) 3,000,000 300 2,933,700 - 2,934,000
Shares issued for
acquisition of MAS
Acquisition Corporation
(unaudited) 335,000 34 (3) - 31
Shares issued for
transaction costs for MAS
Acquisition Corporation
(unaudited) 335,000 34 375,166 - 375,200
To record additional
expense for services
performed in current year
(unaudited) - - 238,000 - 238,000
Net loss for the three
months ended March 31, 2000
(unaudited) - - - (4,262,962) (4,262,962)
---------- ------ ---------- ----------- -----------
Balance,
March 31, 2000
(unaudited) 57,577,727 $5,759 $17,694,449 $(14,017,903) $ 3,682,305
========== ====== ========== =========== ===========
The accompanying notes are an integral part of this statement.
</TABLE>
<PAGE> F-5
<TABLE>
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<S> <C> <C> <C>
Cumulative
amounts from
Three months ended April 6, 1998
March 31, (inception) to
--------------------------- March 31,
1999 2000 2000
------------ ------------ -------------
(unaudited) (unaudited)
Cash flows from operating activities
Loss from continuing operations $(3,253,929) $(4,262,962) $(11,736,543)
Adjustments to reconcile net loss
to cash used in operating activities
Depreciation 475 3,420 9,855
Amortization of licenses
and goodwill 120,494 4,895 367,198
Issuance of common stock
for services 2,831,119 3,547,231 8,450,931
Noncash interest expense - - 333,333
Changes in other operating
assets and liabilities
Prepaid expenses (11,083) (89,224) (152,826)
Due from related party 7,648 (18,077) (18,077)
Other assets (177,840) (177,640)
Increase in accounts payable 245,693 (174,861) 36,507
----------- ----------- ------------
Net cash used in operating
activities of continuing
operations (59,583) (1,167,418) (2,887,262)
----------- ----------- ------------
Net cash used in operating
activities of discontinued
operations (140,401) - (657,080)
----------- ----------- ------------
Cash flows from investing activities
Payments for website costs - (86,898) (86,898)
Payment of settlement costs relating
to discontinued operations - (58,000) (58,000)
Proceeds from sale of discontinued
operations - - 250,000
Acquisition of fixed assets (3,948) (33,416) (49,631)
----------- ----------- ------------
Net cash (used in) provided
by investing activities (3,948) (178,314) 55,471
----------- ----------- ------------
Cash flows from financing activities
Issuance of common stock - 5,159,000 5,593,992
Advances for common stock - - -
Proceeds from loan payable 204,246 - 1,050,151
Repayment of loan payable - - -
Proceeds from convertible debenture - - 1,000,000
----------- ----------- ------------
Net cash provided by
financing activities 204,246 5,159,000 7,644,143
----------- ----------- ------------
Net change in cash and
cash equivalents
during the period 314 3,813,268 4,155,272
Cash and cash equivalents,
beginning of period - 342,004 -
----------- ----------- ------------
Cash and cash equivalents,
end of period $ 314 $ 4,155,272 $ 4,155,272
=========== =========== ============
Supplemental disclosures of cash
flow information:
Cash paid during the period for
Interest $ 1,462 $ - $ 15,298
=========== =========== ============
Supplemental disclosures of noncash,
financing and investing activities (Note D)
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE> F-6
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three months ended March 31, 1999 and 2000
NOTE A - ORGANIZATION OF THE COMPANY AND
NATURE OF BUSINESS
Sierra Gold Corporation was incorporated on August 26, 1988. On
January 4, 1999, Sierra Gold Corporation changed its name to
Payforview.com Corp. (the "Company"). On January 5, 1999, the
Company issued 7,788,840 common shares (plus 1,500,000 shares
held in trust as commission), in exchange for the issued and
outstanding shares of Voyager International Entertainment Inc.
("Voyager"). Voyager was incorporated on April 6, 1998 in
Nevada. As a result of the share exchange, control of the
combined companies passed to the former shareholders of Voyager.
This type of share exchange has been accounted for as a capital
transaction accompanied by a recapitalization of Voyager.
Recapitalization accounting results in consolidated financial
statements of Voyager being issued under the name of
Payforview.com Corp. and Subsidiaries, but are considered a
continuation of Voyager. No goodwill or other intangible assets
were recognized in connection with such recapitalization.
On January 15, 1999, the Company implemented a two-for-one
forward stock split. On April 9, 1999, the Company implemented a
three-for-two forward stock split. All share and per share
amounts in the financial statements have been retroactively
restated to give effect to the above splits. Loss per share
information reflects the recapitalization.
The Company is considered a development stage company as its
planned principal operations have not yet commenced. Presently,
the Company is developing an internet-based website to distribute
movies, music, live events and sports events direct to consumers
on a pay-for-view basis.
Note B - BASIS OF PRESENTATION
Information in the accompanying condensed consolidated financial
statements for the three months ended March 31, 1999 and 2000 and
the cumulative information from April 6, 1998 (inception) through
March 31, 2000 is unaudited. The condensed consolidated
financial statements as of March 31, 2000 and for the three
months ended March 31, 1999 and 2000 and the cumulative amounts
from April 6, 1998 (inception) through March 31, 2000 have been
prepared in accordance with generally accepted accounting
principles applicable to interim financial information and the
<PAGE> F-7
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
Three months ended March 31, 1999 and 2000
NOTE B (continued)
rules and regulations promulgated by the Securities and Exchange
Commission. These financial statements should be read in
conjunction with the Company's annual financial statements filed
on Form 8/KA on or about August 7, 2000. In the opinion of the
Company's management, the March 31, 1999 and 2000 unaudited
condensed consolidated interim financial statements include all
adjustments, consisting of normal recurring adjustments necessary
for a fair presentation of such financial statements. The
results of operations for the three months ended March 31, 1999
and 2000 are not necessarily indicative of the results to be
expected for the entire year.
NOTE C - LOSS FROM IMPAIRMENT
In March 1999, the Company issued 1,012,500 common shares to
Bacchus Entertainment Ltd. at a value of $2,821,500, as
determined by the market price of shares of the Company's common
stock, as consideration for the purchase of various rights and
interests in feature films and motion picture productions.
Management determined that the rights it purchased did not exist,
and believes that the seller misrepresented the items available
and breached the contract. Therefore, the full value of the
consideration issued to Bacchus has been recorded as an
impairment loss as of March 31, 1999.
NOTE D - SUPPLEMENTAL DISCLOSURES OF NONCASH OPERATING,
FINANCING AND INVESTING ACTIVITIES
The significant noncash transactions for the three months ended
March 31, 1999 and 2000 were as follows:
1. In order to complete the acquisition of Voyager, the Company
issued 7,788,840 common shares, (and a commission of
1,500,000 shares).
<PAGE> F-8
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
Three months ended March 31, 1999 and 2000
NOTE D (continued)
2. The Company issued 1,173,509 common shares to acquire Street
Solid. The value of the shares issued was estimated to be
$1,598,280.
In connection with such acquisition, liabilities assumed
were as follows:
Fair value of liabilities assumed $(198,000)
Cash paid -
---------
Liabilities assumed $(198,000)
3. In March 1999 the Company issued 1,012,500 common shares
valued at $2,821,500 towards the acquisition of licenses and
rights.
4. In February 2000, the Company issued an aggregate of
3,000,000 shares of common stock valued at $2,934,000 to
officers and consultants.
5. In February 2000, the Company issued 335,000 shares in
payment of transaction costs related to the MAS acquisition.
6. As of March 31, 2000, the Company recognized an aggregate of
$238,000 of additional compensation relating to stock awards
granted in 1999, for which services were still being
performed during the three months ended March 31, 2000.
NOTE E - CERTAIN TRANSACTIONS
1. Sale of Common Stock - On January 15, 2000, the Company
entered into a stock subscription and option agreement with
three unrelated third-party shareholders. Pursuant to this
agreement, the Company sold 120,000 shares of stock to these
investors at a price of $1.50 per share and provided the
investors with an option to purchase up to a maximum of an
additional 690,000 shares. The investors purchased an
aggregate of 810,000 shares during 2000, for proceeds of
$1,215,000, of which $222,500 was paid in 1999. The shares
were issued in July 2000.
<PAGE> F-9
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
Three months ended March 31, 1999 and 2000
NOTE E (continued)
On January 21, 2000, the Company entered into a stock
subscription and option agreement with certain unrelated
third-party shareholders. Pursuant to this agreement, the
Company sold 1,000,000 shares of stock to these investors at
a price of $1.50 per share. Additionally, the agreement
provided the investors with an option to purchase up to a
maximum of an additional 2,000,000 shares. The investors
purchased an aggregate of 2,800,000 shares for net proceeds
of approximately $4,166,000 (net of $34,000 of transaction
costs). Such shares were issued during the first quarter of
2000.
2. Conversion of Debentures - During January and February 2000,
holders of $172,500 of convertible debentures exchanged such
debentures for 6,900,000 shares of common stock pursuant to
the debenture agreement dated June 25, 1999.
3. Stock Issuance - In February 2000, the Company granted an
aggregate of 3,000,000 shares to officers and consultants.
No additional services were required to be performed, and,
therefore, the Company recorded a charge to operations for
$2,934,000, which represented the market value of such
shares on the date of grant.
4. Acquisition - In February 2000, the Company acquired MAS
Acquisition Corporation, an inactive public shell
corporation in exchange for an aggregate of 335,000 shares
of its common stock. Additionally, the Company incurred
transaction costs relating to this acquisition, and settled
such cost by issuing 335,000 shares and paying cash of
$100,000, which resulted in an aggregate charge to expense
of $475,000 in the first quarter of 2000. This acquisition
was accounted for at the historical basis of the assets of
MAS (which were $31) since there was no business acquired.
No goodwill or other intangibles were acquired.
NOTE F - SUBSEQUENT EVENTS
1. On August 3, 2000, the Company and Bacchus (and related
entities) signed an agreement whereby 487,200 (of the
aggregate of 1,012,500 shares originally issued) will be
returned to
<PAGE> F-10
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
Three months ended March 31, 1999 and 2000
NOTE F (continued)
the Company for cancellation.
2. On May 10, 2000, the Company made a strategic investment of
$1,400,000 plus 2,000,000 shares of restricted common stock
to purchase a 25% interest in a company (controlled by a
consultant of the Company), that is developing an on-line
streaming media product that is synergistic with its core
business. The company has the right to participate in
future financings by the investee. A consultant of the
Company owns the remaining 75% of the investee.
3. On July 13, 2000, the Company's Board of Directors approved
a stock option plan (the "Plan") and reserved 4 million
shares of the Company's common stock to attract, motivate
and retain individuals upon whose continued efforts the
success of the Company in large measure depends. On July
25, 2000, the Company issued 1,675,000 options pursuant to
the Plan to certain employees, officers, directors and
consultants. The exercise price of such options were $.025
per share, based, as per the terms of the Plan, on the
closing price on the day immediately preceding the issue
date. These options vest over a three-year period and
expire in July 2003.
<PAGE> F-11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Forward Looking Information.
This Quarterly Report on Form 10-Q contains certain forward
looking statements and information relating to the Company that
are based on the beliefs of Management, as well as assumptions
made by and information currently available to the Company. When
used in this document, the words "anticipate," "believe,"
"estimate," and "expect" and similar expressions, as they relate
to the Company, are intended to identify forward looking
statements. Such statements reflect the current views of the
Company with respect to future events and are subject to certain
risks, uncertainties and assumptions, including those described
in this discussion and elsewhere in this Quarterly Report on Form
10-Q. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those described herein as
anticipated, believed, estimated or expected. The Company does
not intend to update these forward-looking statements.
General
PayForView is an integrated online and offline content
company that creates and acquires events and information-based
content and delivers such content on a pay-for-view and free
basis. The Company produces and owns programming and distributes
it through new media (the Internet) and old media (broadcast, DBS
and cable television. PayForView has entered into alliances with
entertainment and technology companies that provide elements
needed for the completion of PayForView's plans. These companies
include those providing Internet-related technical support,
filmed or live programming, recorded music and sports related
footage. This creates a vertical integration of entertainment-
related products and Internet expertise, which will establish a
base of operations and cash flow for PayForView. The Company has
not had any significant revenues from operations since purchasing
Voyager Entertainment in 1999. The Company has incurred a
cumulative net loss in its development stage of approximately $14
million as of March 31, 2000. The Company expects to continue to
incur substantial and increasing losses during its development
stage due to continued and increased spending on its website,
hiring of employees, research and the costs of marketing, sales,
video streaming and administrative activities.
The Company anticipates that future revenues and results of
operations may continue to fluctuate significantly depending on,
among other factors, the number of available subscribers who have
access to high speed internet connections, the costs associated
with the streaming of video based content over the Internet,
managements ability to recruit and retain advertising clients,
and managements ability to successfully provide viewers with
compelling and entertaining events. The Company anticipates its
operating activities will result in substantial net losses while
in its development stage and expects losses to continue for a
period of time once in its operational stage.
Results of Operations
Three Months Ended March 31, 2000 as compared to three months
ended March 31, 1999
Revenues
The Company has had no revenues from operations from its
inception on April 6, 1998 to date.
Selling, General and Administrative Expenses:
Selling, General and Administrative Expenses for the three months
ended March 31, 2000 increased to $4,289,000 from $310,000, a net
increase of $3,979,000 as compared to the three months ended
March 31, 1999. The increase was primarily due to increases in
consulting fees of $3,318,000 (of which $3,172,000 was non-cash
equity based compensation), transaction costs relating to the MAS
Acquisition of $475,000 (of which $375,000 was non-cash
compensation for commission.), and $150,000 increase in
professional fees. The increases in consulting and professional
fees resulted from the Company's web-design, marketing and
content acquisition efforts. The remaining increase of $36,000
is due to higher overhead costs relating to the Company's move
from Vancouver British Columbia to New York City.
Loss From Impairment:
The Company had a loss from impairment during the three months
ended March 31, 1999 of $2,821,500 due to the fact that the
Company had issued shares in payment for certain deliverables
that it subsequently became aware did not exist. The decrease in
loss from impairment to zero, for the three months ended March
31, 2000 is the result of the Company not entering into a similar
transaction in the period.
Loss From Discontinued Operations:
During the three months ended March 31, 1999, the results of
operations of the Company include approximately $140,000 of
losses relating to Street Solid. Street Solid was disposed of in
October 1999, and therefore the results of operations during 1999
of the entity are accounted for as discontinued operations.
There were no such discontinued operations during the three
months ended March 31, 2000.
Interest Income:
Interest Income for the three months ended March 31, 2000
increased to $33,295 as compared to zero for the three months
ended March 31, 1999. This is due to larger cash and cash
equivalents balances during the three months ended March 31, 2000
resulting from the net proceeds received by the Company from its
private placements of shares.
Liquidity and Capital Resources
Since inception through March 31, 2000, the Company has a deficit
accumulated during the development stage of approximately $14.0
million and expects to continue to incur substantial operating
losses for the next several years of its development stage. The
Company has financed its operations primarily through private
placements of its Common Stock. From inception to March 31, 2000
the Company received proceeds from the sale of equity securities,
net of share issuance expenses, of approximately $6 million. Cash
proceeds from the sale of the Company's securities for the three
months ended March 31, 2000 were Approximately $5.4 million,
including the $222,500 received in December 1999, compared to
zero for the three months ended March 31, 1999.
The Company had net cash used in operating activities of
$1,167,418 for the three months ended March 31, 2000. Net Cash
and cash equivalents used in operations for the three months
ended March 31, 2000 consisted of the net loss of $4,262,962,
which was offset by the non-cash equity based compensation
portion of the net loss of $3,547,231, increases in prepaid
expenses of $89,224, increases in due from related parties of
$18,077, increases in other assets of $177,840 (which represented
a security deposit on the Company's new premises), and decreases
in accounts payable of $174,861.
Net cash provided by financing activities consisted of $5,159,000
for the three months ended March 31, 2000. Cash provided by
financing activities in 2000 consisted of proceeds from the sale
of common stock of $5,159,000. Cash provided by financing
activities in 1999 consisted of proceeds from loans and advances.
Net cash used in investing activities consisted of $178,314 for
the three months ended March 31, 2000. Investing activities for
the three months ended March 31, 2000 included payments for
website costs of $86,898, a settlement payment to the purchaser
of Street Solid of $58,000, and capital expenditures of $33,416.
Net cash used in operating activities of discontinued operations
was $140,401 for the three months ended March 31, 1999, which
represented the cash used in operating activities of Street Solid
Records, Inc., of which 81% was sold on October 29, 1999.
The Company's capital funding requirements will depend on
numerous factors, including the progress and magnitude of the
Company's web site development, marketing plans, technological
advances, competitive and market conditions, the ability of the
Company to establish and maintain collaborative arrangements, the
cost of streaming video content on the Internet and effectiveness
of commercialization activities and arrangements.
In May of 2000, the Company made a strategic investment in Turn-
key Entertainment LLC, a private development stage Delaware
Corporation that is developing an on-line streaming media product
that is synergistic with the Company's core business. The Company
issued 2,000,000 shares of its restricted common stock and paid
$1,400,000 in cash in exchange for 25% of the outstanding stock
of Turn-key Entertainment LLC. The remaining 75% of Turn-Key is
owned by a consultant of the Company.
The Company is likely to require substantial funding to continue
its Web site development, marketing, sales, and administrative
activities. The Company has raised funds in the past through the
sale of securities, and may raise funds in the future through
public offerings or private placements of securities,
collaborative arrangements or from other sources. The Company
continues to explore and, as appropriate, will enter into
discussions with other companies regarding the potential for
equity investment, collaborative arrangements, license agreements
or development or other funding programs with the Company in
exchange for marketing, distribution or other rights to the
Company's product and services. However, there can be no
assurance that discussions with other companies will result in
any investments, collaborative arrangements, agreements or
funding, or that the necessary additional financing through debt
or equity financing will be available to the Company on
acceptable terms, if at all. Further, there can be no assurance
that any arrangements resulting from these discussions will
successfully reduce the Company's funding requirements. If
additional funding is not available to the Company when needed,
the Company will be required to scale back its web site
development, marketing and administrative activities and the
Company's business and financial results and condition would be
materially adversely affected.
YEAR 2000 DISCLOSURE
The Year 2000 issue is the potential for system and processing
failures of date-related data and the result of computer-
controlled systems using two digits rather than four to define
the applicable year. For example, computer programs that have
time-sensitive software may recognize a date using "00" as the
year 1900 rather than the year 2000. This could result in system
failure or miscalculations causing disruptions of operations,
including, among other things, a temporary inability to process
transactions. The Company has not in any way been affected by
Year 2000 issues related to non-compliant information technology
("IT") systems or non-IT systems operated by the Company or by
third parties.
As of the date of this filing, this risk has been a non-issue and
neither the registrant nor any of its hardware or software
suppliers has experienced any system failures or disruptions
caused by the Year 2000 issue. To date, the Company has not
incurred, and does not expect to incur, any material costs in
remediating any potential Year 2000 problems. Most of the
Company's equipment is not date-sensitive and thus not
susceptible to Year 2000 issues. Any equipment that may be date-
sensitive is new, and the architecture and design of its software
was taken into account in all equipment purchases. Purchases
have been and will continue to be limited to equipment from well-
known and reputable hardware manufacturers.
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
During the first quarter of 2000, the Company was served
with a lawsuit by Destiny Music (Los Angeles Superior Court Case
#BC225482), claiming that the Company owed a long-term lease
obligation, further financial support on certain projects and/or
group promotional efforts and a return of funds allegedly loaned
to Street Solid Records, a subsidiary of the Company at the time,
which have not been returned as promised. The lawsuit is in the
early stages of discovery and information is being provided by
the various parties to validate or disaffirm the various
positions espoused by the parties. In addition to PayForView,
the suit also named Solid Disc Records; Solid Disc, Inc.; Street
Solid Records, Inc.; Jay Warsinske, Marc Pitcher and Nic
Meredith. The Company is providing a defense for Mr. Pitcher and
Mr. Meredith, as they were officers of the corporation at the
time of the disputed events. The Company denies the majority of
the claims presented and believes that it has meritorious
defenses on the primary claims.
ITEM 2. CHANGES IN SECURITIES
1. During the first quarter of 2000 the Company entered
into two separate subscription agreements for the
private placement of shares of the Company's Common
Stock at a price of $1.50 per share. The Company
received $1,215,000 from the sale of 810,000 shares
under the terms of the first agreement on January 15th,
2000, and $4,200,000 from the sale of 2,800,000 shares
under the terms of the second agreement dated January
21, 2000, for a total proceeds of $5,381,000, which is
net of $34,000 of offering costs.
2. During the first quarter of 2000, holders of $172,500
of convertible debentures exchanged such debentures for
6,900,000 shares of common stock pursuant to a
Debenture Agreement dated June 25, 1999.
3. In February 2000, the Company granted an aggregate of
3,000,000 shares to officers and consultants as equity
based compensation. The shares were distributed and
vested on that date.
4. In March of 2000, the Company acquired MAS Acquisition
Corporation, an inactive public shell corporation in
exchange for an aggregate of 670,000 shares of its
common stock (including a commission of 335,000 shares)
and $100,000.
5. In May of 2000, the Company made a strategic investment
in Turn-key Entertainment LLC, a private development
stage Delaware Corporation that is developing an on-
line streaming media product that is synergistic with
the Company's core business. The Company issued
2,000,000 shares of its restricted common stock and
paid $1,400,000 in cash in exchange for 25% of the
outstanding stock of Turn-key Entertainment LLC.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
NONE
ITEM 5. OTHER INFORMATION
NONE
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
NONE
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of
1934, the Registrant has caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly
authorized.
PAYFORVIEW.COM CORP.
Date: August 8, 2000 By: /s/ Marc A. Pitcher
Marc A. Pitcher,
President & Director
