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 September 30, 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 September 30, 2000: 58,940,667 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, September 30,
ASSETS 1999* 2000
(unaudited)
Current assets
Cash and cash equivalents $ 342,004 $ 1,170,812
Prepaid expenses 63,602 6,500
----------- ------------
405,606 1,177,312
Fixed assets, net 351,780 452,231
Investment in Street Solid Records 10,000 10,000
Deferred offering costs - 600,000
Intangible assets, net 39,169 100,276
Capitalized website development costs 282,783
Other assets - 177,840
----------- ------------
$ 806,555 $ 2,800,442
=========== ============
LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIENCY)
Current liabilities
Accounts payable $ 261,368 $ 225,727
Liabilities from discontinued
operations 256,000 325,000
Loan payable 1,050,151 -
----------- ------------
1,567,519 550,727
----------- ------------
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,
43,397,727 and 58,940,667
shares, respectively 4,340 5,894
Additional paid-in capital 8,594,637 20,164,273
Deficit, accumulated during the
development stage (9,754,941) (17,920,452)
----------- ------------
Stockholders' equity (deficiency) (1,155,964) 2,249,715
----------- ------------
$ 806,555 $ 2,800,442
=========== ============
*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 (UNAUDITED)
<S> <C> <C>
Three months Ended
September 30,
---------------------------
1999 2000
------------ ------------
(As Restated)
Costs and expenses
Selling, general and administrative
Expenses $ 258,720 $ 880,812
Amortization of licenses and
Goodwill 114,846 63,503
Loss on impairment 1,386,876
Interest expense 14,095
Interest income (22,433)
----------- -----------
Total costs and expenses 1,774,537 (921,882)
----------- -----------
Loss from continuing operations (1,774,537) (921,882)
----------- -----------
Discontinued operations (Street
Solid Records)
Loss from operations 356,439 -
Loss on disposal - 127,000
----------- -----------
Loss from discontinued operations (356,439) (127,000)
----------- -----------
Net Loss $(2,130,976) $(1,048,882)
=========== ===========
Basic and diluted loss per share:
Continuing operations $ (.10) $ (.02)
Discontinued operations (.02) -
----------- -----------
Basic and diluted loss per share $ (.12) $ (.02)
=========== ===========
Weighted-average shares outstanding 17,394,539 59,153,730
=========== ===========
</TABLE>
<TABLE>
<S> <C> <C> <C>
Cumulative
amounts from
Nine months Ended April 6, 1998
September 30, (inception) to
--------------------------- September 30,
1999 2000 2000
------------ ------------ -------------
(As Restated)
Costs and expenses
Selling, general and administrative
Expenses $ 1,271,851 $ 5,858,101 $ 8,373,726
Amortization of licenses and
Goodwill 320,584 77,101 439,404
Loss on impairment 4,208,376 4,247,022
Investment expense 2,400,000 2,400,000
Interest expense 340,806 348,631
Interest income (96,540) (96,540)
----------- ----------- ------------
6,141,617 8,238,662 15,712,243
----------- ----------- ------------
Loss from continuing operations (6,141,617) (8,238,662) (15,712,243)
----------- ----------- ------------
Discontinued operations (Street
Solid Records)
Loss from operations 1,031,200 - 1,056,167
Loss on disposal - 127,000 1,352,193
----------- ----------- ------------
Loss from discontinued operations (1,031,200) (127,000) (2,408,360)
----------- ----------- ------------
Loss before extraordinary item (7,172,817) (8,365,662) (18,120,603)
Extraordinary item - gain on
extinguishment of debt (Note E) - (200,151) (200,151)
----------- ----------- ------------
Net Loss $(7,172,817) $(8,165,511) $(17,920,452)
=========== =========== ============
Basic and diluted loss per share:
Continuing operations $ (.38) $ (.18) $ (.63)
Discontinued operations (.07) - (.10)
Extraordinary item - .01 .01
----------- ----------- ------------
Basic and diluted loss per share $ (.45) $ (.17) $ (.72)
=========== =========== ============
Weighted-average shares outstanding 15,784,137 47,507,480 25,023,527
=========== =========== ============
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 (UNAUDITED)
Period from April 6, 1998 (inception) through September 30, 2000
<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 (UNAUDITED) (continued)
Period from April 6, 1998 (inception) to September 30, 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) 3,610,000 $ 361 $5,381,139 $ - $ 5,381,500
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 33 (2) - 31
Shares issued for
transaction costs for MAS
Acquisition Corporation
(unaudited) 335,000 34 375,166 - 375,200
Shares issued for
investment in Turnkey
Entertainment
(unaudited) 2,000,000 200 999,800 1,000,000
Proceeds from sale of
1,280,000 shares of the
1,500,000 shares held in
escrow (unaudited) - - 899,602 899,602
Cancellation of remaining
escrow shares(unaudited) (220,000) (22) 22 - -
Additional compensation
for services performed
(unaudited) - - 117,000 - 117,000
Warrants issued for commitment
Fees (unaudited) 600,000 600,000
Stock options issued for
Services (unaudited) 91,357 91,357
Cancellation of partial shares
Related to Bacchus (417,060) (42) 42
Net loss for the nine
months ended September 30, 2000
(unaudited) - - - (8,165,511) (8,165,511)
---------- ------ ---------- ----------- -----------
Balance,
September 30, 2000
(unaudited) 58,940,667 $5,894 $20,164,273 $(17,920,452) $ 2,249,715
========== ====== ========== =========== ===========
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 (UNAUDITED)
<S> <C> <C> <C>
Cumulative
amounts from
Nine months ended April 6, 1998
September 30, (inception) to
--------------------------- September 30,
1999 2000 2000
------------ ------------ -------------
(As Restated)
Cash flows from operating activities
Loss from continuing operations $(6,141,617) $(8,238,662) $(15,712,243)
Adjustments to reconcile net loss
to cash used in operating activities
Depreciation 1,319 68,664 75,099
Amortization of licenses
and goodwill 320,584 20,410 382,713
Issuance of common stock
for services and
transaction costs 4,351,204 3,517,588 8,421,288
Noncash investment expense 2,400,000 2,400,000
Noncash interest expense 333,333 - 333,333
Changes in other operating
assets and liabilities
Prepaid expenses (22,535) 7,102 (56,500)
Due from related party 7,648 - -
Other assets - (127,840) (127,640)
Accounts payable 479,678 (35,641) 175,727
----------- ----------- ------------
Net cash used in operating
activities of continuing
operations (670,386) (2,388,379) (4,108,223)
----------- ----------- ------------
Net cash used in operating
activities of discontinued
operations (606,764) - (657,080)
----------- ----------- ------------
Cash flows from investing activities
Payments for website costs - (306,072) (306,072)
Payment of settlement costs relating
to sale of discontinued operations - (58,000) (58,000)
Payment for licenses and rights (81,517) (81,517)
Proceeds from sale of discontinued
operations - - 250,000
Investment in Turnkey Entertainment LLC - (1,400,000) (1,400,000)
Acquisition of fixed assets (10,195) (145,826) (162,041)
----------- ----------- ------------
Net cash used in investing
activities (10,195) (1,991,415) (1,757,630)
----------- ----------- ------------
Cash flows from financing activities
Issuance of common stock 100,000 5,208,602 5,643,594
Proceeds from loan payable 1,046,463 - 1,050,151
Repayment of loan payable (59,418) - -
Proceeds from convertible debenture 200,000 - 1,000,000
----------- ----------- ------------
Net cash provided by
financing activities 1,287,345 5,208,602 7,693,745
----------- ----------- ------------
Net change in cash and
cash equivalents
during the period - 828,808 1,170,812
Cash and cash equivalents,
beginning of period - 342,004 -
----------- ----------- ------------
Cash and cash equivalents,
end of period $ - $ 1,170,812 $ 1,170,812
=========== =========== ============
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 F)
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 and Nine months ended September 30, 1999 and 2000
(unaudited)
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. The company is also developing certain
offline business opportunities.
NOTE B - BASIS OF PRESENTATION
Information in the accompanying condensed consolidated financial
statements as of September 30, 2000 and for the three and nine
months ended September 30, 1999 and 2000 and the cumulative
amounts from April 6, 1998 (inception) through September 30, 2000
is unaudited and has been prepared in accordance with accounting
principles generally acceptable in the United States of America
applicable to interim financial information and the rules and
regulations
<PAGE> F-7
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
Three and Nine months ended September 30, 1999 and 2000
(unaudited)
NOTE B (continued)
promulgated by the Securities and Exchange Commission. These
financial statements should be read in conjunction with the
Company's annual financial statements included in its Form 8/KA,
as amended, filed with the Securities and Exchange Commission on
or about October 25, 2000. In the opinion of the Company's
management, the September 30, 1999 and 2000 unaudited condensed
consolidated interim financial statements include all
adjustments, consisting solely of normal recurring adjustments,
necessary for a fair presentation of such financial statements
(See Note C). The results of operations for the three and nine
months ended September 30, 1999 and 2000 are not necessarily
indicative of the results to be expected for any other interim
period or the entire year.
Note C - RESTATEMENT OF SEPTEMBER 30, 1999 INTERIM FINANCIAL
STATEMENTS(UNAUDITED)
The previously reported financial information for the three and
nine months ended September 30, 1999 have been restated to
reflect the effect of adjustments that were recorded as of
December 31, 1999.
NOTE D - 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. (see note H-7)
In August 1999, the Company issued an aggregate of 1,800,000
shares to an investment banker in exchange for financial
advisory services. The shares were issued in anticipation of
services which were never received. The Company and the
investment banker signed mutual release of liabilities and
obligations in March 2000. The value of these shares which has
been determined to be $1,386,876 has been charged to operations
as a loss from impairment during the three months ended September
30, 1999.
NOTE E - EXTRAORDINARY GAIN ON DEBT EXTINGUISHMENT
As of December 31, 1999, the Company had notes outstanding
aggregating $1,050,151 which were payable on demand. In May
2000, the Company settled this obligation through liquidation of
approximately 1,280,000 shares of the 1,500,000 shares held by
the trustee in connection with the Voyager acquisition (Note A).
Such shares were sold to unrelated third parties for aggregate
proceeds of $899,602, of which $850,000 were distributed to the
holders of the loan payable and in payment of transaction costs.
The remaining proceeds from the sale of the above shares, which
was $49,602 were recorded as additional paid-in- capital during
the three and the nine months ended September 30, 2000.
In May 2000, the Company recorded a gain on extinguishment of
debt of $200,151, which has been reflected as an extraordinary
gain. The remaining 220,000 shares held in trust are the
property of the Company and are not reflected as shares
outstanding at September 30, 2000.
<PAGE> F-8
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
Three and Nine months ended September 30, 1999 and 2000
(unaudited)
NOTE F - SUPPLEMENTAL DISCLOSURES OF NONCASH FINANCING AND
INVESTING ACTIVITIES
The significant noncash transactions for the nine months ended
September 30, 1999 and 2000 were as follows:
1. In January 1999, in order to complete the acquisition
of Voyager, the Company issued 7,788,840 common shares,
(and a commission of 1,500,000 shares). (See Note A.)
2. In January 1999, 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 $198,000. (see note I)
3. In March 1999, the Company issued 1,102,500 common
shares valued at $3,067,400 towards the acquisition of
licenses and rights.
4. In April 1999, the Company issued 83,500 shares of
common stock valued at $63,410 in exchange for
services.
5. In January 2000, holders of $172,500 of convertible
debentures exchanged such debentures into 6,900,000
shares of the Company's common stock. (See Note F-2.)
6. 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. (See Note F-3.)
7. In February 2000, the Company issued 335,000 shares in
payment of transaction costs related to the MAS
acquisition. (See Note F-4.)
8. In May 2000, the Company invested 2,000,000 shares
which were valued at $1,000,000, as part of its
investment in Turnkey Entertainment LLC.
This investment was subsequently written down to zero
as of June 30, 2000 (See Note H-5)
9. As of June 30, 2000, the Company recognized an
aggregate of $117,000 of additional compensation
relating to stock awards granted in 1999, for which
services were still being performed through June 30,
2000. No additional compensation was required to be
recorded during the three months ended September 30,
2000.
10. In August 2000, the Company issued 2,000,000 warrants
as a commitment fee which the Company has valued at
$600,000 and has been recorded as deferred offering
costs as of September 30, 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 and Nine months ended September 30, 1999 and 2000
(unaudited)
NOTE G - LOSS PER SHARE
For the three and nine month periods ended September 30,
2000 an aggregate of 2,275,000 stock options and warrants
were excluded from the calculation of loss per share since
their effect would be antidilutive. During the three and
nine month periods ended September 30, 1999, no potential
common shares, were outstanding.
NOTE H - 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 January 2000, for proceeds of
$1,215,000, of which $222,500 was collected in December
1999.
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).
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.
<PAGE> F-10
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
Three and Nine months ended September 30, 1999 and 2000
(Unaudited)
NOTE H (continued)
5. Investment in Turnkey Entertainment - On May 10, 2000,
the Company made a strategic investment of $1,400,000
plus 2,000,000 shares of restricted common stock, which
were valued at $1,000,000 based on the market price of
the Company's 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
financing by the investee. A consultant of the Company
owns the remaining 75% interest. The investee had no
operations through September 30, 2000 other than the
Company's investment and had cash available of
$1,345,263.
Since the Company neither manages nor controls the
investee, which remains in the development stage and
has no significant operations to date, the investment
was charged to expense in accordance with generally
accepted accounting principles.
6. 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 $.25 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 at a rate of 25% immediately with
the remainder vesting over a three-year period and
expire in July 2003.
These individuals have been determined to be
non-employees under APB-25. Therefore, the Company
estimated the fair value as of September 30, 2000 using
the Black-Scholes pricing model and recorded the fair
value compensation of $91,367 during the three and nine
months ended September 30, 2000. The remaining
compensation will be measured as of each reporting
period and recognized over the vesting period.
7. On August 3, 2000, the Company and Bacchus (and related
entities) signed an agreement whereby on August 17,
2000, 417,060 of the aggregate of 1,012,500 shares of
common stock originally issued were returned to the
Company for cancellation and are not included in shares
outstanding.
8. On August 31,2000 the Company entered into an agreement
with an investment bank to register and underwrite
shares of its common stock with an aggregate market
value not to exceed 40,000,000 which will be offered
sale to the public. In connection with such agreement,
the Company was obligated to issue warrants to purchase
2,000,000 shares of common stock to such investment
bank, at an exercise price of $.28 per share, subject
to adjustment under certain conditions. These warrants
remain the property of the investment bank, whether or
not the registration and proposed sale of shares to the
public is completed. The agreement also provides for
additional warrants to be issued to the investment bank
upon achieving certain milestones in the registration
process. The company issued such warrants on August 31,
2000 and valued such warrants at $600,000 based on a
Black-Scholes pricing model, and included these
warrants in deferred offering costs.
NOTE I - SUBSEQUENT EVENTS
On November 8, 2000 the Company settled an outstanding lawsuit
with Destiny Music for $325,000 subject to adjustment to
$350,000. Amounts are payable in cash and the Company's stock.
A liability of $198,000 had been assumed by the Company in
connection with its purchase of Street Solid. Accordingly, an
additional $127,000 was recorded as additional loss from
discontinued operations during the three months ended September
30, 2000.
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-QSB contains certain forward
looking statements and information relating to us that are based
on the beliefs of management, as well as assumptions made by and
information currently available to us. When used in this
document, the words "anticipate," "believe," "estimate," and
"expect" and similar expressions, as they relate to us, are
intended to identify forward looking statements. Such statements
reflect our current views 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-QSB. 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. We do not intend to update these forward-looking
statements.
Formation of Company.
PayForView was organized on August 26, 1988, under the name
Sierra Gold Corporation and under the laws of the State of
Nevada. PayForView had no operations at that time and as such
was considered a development stage company.
PayForView commenced trading on the National Association of
Securities Dealers (NASD) OTC Bulletin Board on December 21, 1998
under the trading symbol SIRG.
On January 4th, 1999 the name of PayForView was changed to
PayForView.com under the trading symbol PAYV.
Description of Business.
PayForView, headquartered in New York with satellite offices in
Los Angeles, California and Vancouver, Canada, is an integrated
online and offline content company that creates and acquires
events and information-based programming and delivers such
content on a pay-for-view and free basis. We produce and own
programming and distribute it through new media (the Internet)
and old media (broadcast, DBS and cable television). In this
manner, we are able to generate revenues from traditional sources
while we build a strong brand in the Internet space in
preparation for an expanding broadband universe and the upcoming
convergence.
PayForView continues to enter 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 programming.
PayForView.com Website.
Our website, hosted by SofTV, a leader in streaming media in the
emerging Broadband E-Commerce market, provides users with a
unique and vibrant interface. The core of the site is an
embedded streaming media window, where the"primary" content,
consisting of live events, archival entertainment and promos will
be displayed. Surrounding the window is a selection of
"parallel" content areas, where dynamic and compelling
information, coincides with and enhances the primary content.
The beta version of the website was launched on April 26, 2000,
when the Company offered its first boxing event.
PayForView's leading-edge technology allows video to house
"triggers" whereby text, photos and images are seen at specific
times when a trigger is released simultaneously to the streaming
video. This innovative development is both interesting to the
viewer and a benefit to sponsors.
Since the launch of our beta web site in April 2000, we have
successfully broadcast an International Woman's Boxing
Championship event, an Ultimate Fighting Championship event with
a contract for at least two more, a live stand-up comedy event
and two international soccer events including the USA Woman's
soccer team vs. Norway game web-cast on July 30, 2000.
We will also acquire, distribute and sell filmed entertainment
online and, through our Voyager Film Sales subsidiary, in the
traditional manner through existing relationships with
distributors and content providers.
Strategic Alliances.
PayForView has entered the marketplace through alliances with
entertainment and technology companies that provide elements
needed for the completion of our 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 our base of
operations and cash flow.
Technology Providers.
PayForView has aligned itself with various quality technology
providers to provide essential streaming video, web casting and
supporting services.
InterVu/Akami
InterVu (which was purchased by Akami in early 2000) is a
streaming media service provider working to make the Internet a
viable broadcast medium for entertainment, business and
education.
Akami has the technical expertise and distributed server network
to allow PayForView to reliably deliver programming via the
Internet. Akami has developed proprietary technology that allows
PayForView to manage broadcast streams in real time and gives
PayForView access to critical information about its video
database and streaming files.
With its own distributed broadcast network, Akami can provide
PayForView with reliable and efficient connectivity to the
Internet using a premier Internet infrastructure built on a high-
speed backbone and high speed links to the Internet.
SofTV
SofTV is a leading-edge Canadian-based Internet developer
specializing in video streaming and interactive content based on
broadcast applications. SofTV's patent pending technology allows
website publishers to combine the emotional impact of video with
the power of images, text and graphics. SofTV has created and
also hosts PayForView's website.
Bandwidth Growth.
In order to view good quality film and video files over the
Internet, subscribers will require a cable modem, DSL or greater
bandwidth connection. Research indicates that cable companies
will be the leading provider of residential broadband service.
The following table identifies current and expected trends in the
adoption of high bandwidth Internet access. These high-end
bandwidth users represent computer users with the capacity to use
services provided by PayForView. (Source: Paul Kagen and
Associates)
Year Cable Modem DSL Subscriber Total High
Users Users Bandwidth Users
1999 1,460,000 420,000 1.880,000
2000 3,600,000 2,400,000 6,000,000
2001 7,590,000 4,170,000 11,760,000
2002 12,950,000 7,090,000 20,040,000
2003 15,840,000 10,590,000 26,430,000
2004 18,980,000 12,910,000 31,890,000
A quickening pace of development in both technology and content
available to users of the World Wide Web parallels this increase
in Internet access speed. New technologies such as video and
audio streaming enable the creation of new forms of content,
combining aspects of traditional, narrowband web design
(including text, graphics, and hyper-links) with the video-based
production concepts of television. While this market is growing
rapidly, it presently accounts for a small percentage of the
Internet users online today. Accordingly, most companies
involved in the development of technology and content for the Web
are focusing on solutions that are intended to provide an
acceptable experience for the predominant narrowband customer,
while offering an improved version of the same experience to
broadband users.
Bandwidth Islands.
In the marketplace, we have identified companies, which we
describe as "Bandwidth Islands". These are organizations whose
primary business is the sale and service of bandwidth and related
services to end users, both residential and commercial. Each of
these Islands has a built in subscriber base, and instant access
through their database to the high bandwidth users which
PayForView is targeting.
In selling high bandwidth services to homes, one of the
challenges faced by the Islands is content. Consumers, while
attracted to the extra speed in Internet surfing possible with
higher bandwidth, generally question the value of upgrading to
higher bandwidth at higher cost when to date, there is not enough
content on the net for which high bandwidth is required. By
collecting content and creating and perfecting a delivery and
tracking mechanism, PayForView will be able to offer the Islands
the content with which they will be able to attract additional
high band width customers, and keep the ones they have on our
subscriber list. Additionally, by retaining control of the
content and delivery system, we intend to sell advertising
during our programming, thus offering the Island an additional
source of revenue.
Growth of Online Commerce.
The Internet is dramatically affecting the methods by which
consumers and businesses are buying and selling goods and
services. The Web provides the ability to reach a global
audience and to operate with minimal infrastructure, reduced
overhead and greater economies of scale, while providing
consumers with a broad selection, increased pricing power and
unparalleled convenience. As a result, a growing number of
consumers are transacting business on the Web, including buying
consumer goods, trading securities, paying bills and purchasing
airline tickets. International Data Corporation estimates that
approximately 28% of Web users purchased goods or services over
the Web in 1998 and that approximately 40% of Web users will make
online purchases in 2002. Jupiter Communications estimates that
retail consumer purchases of goods and services over the Internet
will increase from $5.0 billion in 1998 to $29.4 billion in 2002.
We believe that as electronic commerce expands, advertisers and
direct marketers will increasingly use the Web to advertise
products, drive traffic to their Websites, attract customers and
facilitate transactions.
Growth of Internet Advertising.
The Web is evolving into an important medium for advertisers due
to its interactive nature, global reach, rapidly growing audience
and the expected increase in online commerce. Unlike more
traditional advertising methods, the Web gives advertisers the
potential to target advertisements to broad audiences or to
selected groups of users with specific interests and
characteristics. The Web also allows advertisers and direct
marketers to measure the effectiveness and response rates of
advertisements and to track the demographic characteristics of
Web users. The interactive nature of Web advertising enables
advertisers to better understand potential customers, and to
change messages rapidly and cost effectively in response to
customer behavior and product availability.
We anticipate a significant increase in online advertising.
Forrester Research estimates that the dollar value of Internet
advertising in the U.S. will increase from $1.3 billion in 1998
to $10.4 billion in 2003, representing a 52% compounded annual
growth rate. International online ad spending is expected to
grow from $0.2 billion in 1998 to $4.7 billion in 2003,
representing an 87% compounded growth rate. By comparison,
Broadcasting & Cable estimates that $130 billion was spent in
1998 on traditional media advertising in the U.S., including
television, radio, outdoor and print. Until recently, the
leading Internet advertisers have been technology companies,
search engines and Web publishers. However, many of the largest
advertisers utilizing traditional media, including consumer
products companies and automobile manufacturers, are expanding
their use of online advertising. We believe that online
advertising will continue to capture an increasing share of
available advertising dollars and that this trend will drive
demand for online ad inventory and for sophisticated Internet
advertising solutions.
Driven by the growing online population, the rise in time spent
online and increasing digital commerce adoption, online
advertising revenues have surpassed outdoor advertising and we
anticipate will exceed spending for cable advertising.
Revenue Streams.
Although PayForView has a transaction/advertising revenue model
it is unlike traditional websites that offer only one or two of
these revenue streams. The Company has numerous methods to
capitalize on its exclusive branding, image and content.
PayForView.com will derive its revenue streams from the following
sources:
-Live Events
Users pay an online fee for a one-time viewing of select live
event programming. Users pay a fee of $1.99 to $4.95 depending on
the exclusivity of the event. For example, the Ultimate Fighting
Championship event that PayForView offered on June 9, 2000 was
only seen on our website and on Direct Broadcast Satellite (DBS).
It was not on either network or cable television.
-Archival Events
In the future, users will be charged an online transactional fee
for a one-time viewing of an archived event program. The
archival programming will consist of classic sports events, major
boxing matches, films, comedy performances, etc. The charge for
these events will range from $.49 to $1.99. These events are at
the convenience of the viewers, at the time they wish to view
them.
-Advertising
Since PayForView.com is a very "sticky" site, one where a user
resides for a lengthy period of time, advertisers will pay to
have their advertising served and tracked on our web site. These
advertisers will be on the web site the length of time users view
either the free entertainment information, which might be upwards
of a half hour, or a live event, which they will watch for
several hours.
-E-Commerce
Users may purchase merchandise specifically related to event
programs, both live or archived from PayForView's e-commerce
shop. Merchandise pertaining to our free entertainment and
sports information will also be offered. PayForView is in
discussions to partner with several retailers that offer event
related merchandise.
-On-line Syndication
PayForView will capitalize on the lack of quality entertainment
produced specifically for on-line viewing. At this time, there
are a number of Internet companies who are streaming video who
are in need of the type of programming PayForView is creating and
acquiring. Our executive team, with experience and contacts in
event production, see an excellent opportunity to become an on-
line provider of video based events to emerging Internet based
streaming media companies. The Company is well positioned as a
one stop, turnkey provider of compelling, entertaining content.
-Sales to traditional media
During the rollout of the Broadband universe, some of
PayForView's acquired programming will be sold to traditional
media such as DBS and cable television. This allows for revenue
generation of a magnitude greater than the present Broadband
universe allows.
-VHS/DVD Sales
Since PayForView acquires programming, we will negotiate with
international VHS/DVD distributors to release the product in
brick-and-mortar and electronic commerce distribution avenues to
gain additional revenue.
Competition.
Perhaps closest to our business model is www.centerseat.com.
Similar in design and concept, Center Seat offers a wide variety
of online entertainment, but does not charge for online
programming. Center Seat also does not deliver live events or
offer chat room functionality. Moreover, Center Seat does not
presently offer rich media advertising as does PayForView.
Kanakaris Wireless Inc., (OTC BB: KKRS) www.kanakaris.com offers
online pay-per-view movies, downloadable books and related e-
commerce.
House of Blues, www.hob.com offers live and archival music events
that appear at the House of Blues venues and also offers related
e-commerce.
PayForView's approach differs from the above through its
diversification. By having an interest in sports and event
alliances and a film production and sales division, PayForView is
in a position to create revenue from non-Internet sources while
also creating the content it intends to broadcast on the
Internet. By including music, sports, comedy and other live
events, and utilizing an imbedded video window, triggered
parallel content and rich media advertising, PayForView is
attempting to differentiate itself from its competitors.
Results of Operations.
General.
We are 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. We
produce and own programming and distribute it through new media
(the Internet) and old media (broadcast, DBS and cable
television). We have entered into alliances with entertainment
and technology companies that provide elements needed for the
completion of our 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 us. We have not had any significant revenues from
operations since purchasing Voyager Entertainment in 1999. We
have incurred a cumulative net loss in our development stage of
approximately $17.9 million as of September 30, 2000. We expect
to continue to incur substantial and increasing losses during our
development stage due to continued and increased spending on our
website, hiring of employees, research and the costs of
marketing, sales, video streaming and administrative activities.
We anticipate 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, our ability
to recruit and retain advertising clients, and our ability to
successfully provide viewers with compelling and entertaining
events. We anticipate our operating activities will result in
substantial net losses while in our development stage and expect
losses to continue for a period of time once in our operational
stage.
Three months ended September 30, 2000 as compared to three months
ended September 30, 1999 and nine months ended September 30, 2000
as compared to the nine months ended September 30, 1999.
Revenues.
We had no revenues from operations from our inception on April 6,
1998 to date.
Selling, general and administrative expenses:
Selling, general and administrative expenses for the three months
ended September 30, 2000 increased to $880,812 from $258,720, a
net increase of $622,092 as compared to the three months ended
September 30, 1999. The increase includes $91,000 of equity-
based compensation and additional consulting and personnel costs
for the reasons discussed below.
Selling, general and administrative expenses for the nine months
ended September 30, 2000 increased to $5,858,101 from $1,271,851
a net increase of $4,586,250 as compared to the nine months ended
September 30, 1999. The increase was primarily due to increases
in personnel costs and consulting fees of $3,860,630 (of which
$3,025,357 was non-cash equity based compensation), transaction
costs relating to the MAS Acquisition of $475,000 (of which
$375,000 was non-cash, equity based compensation), and $186,000
increase in professional fees offset by a decrease in advertising
and promotion of $379,000. The increases in personnel costs,
consulting and professional fees resulted from our web-design,
marketing and content acquisition efforts. Advertising and
promotion decreased during the nine months ended September 30,
2000 due to our efforts being focused on the development of a new
version of our web site which was in its beta test phase and
therefore we spent less time and effort on advertising and
marketing. Advertising and marketing costs incurred during the
nine months ended September 1999 included $103,000 paid for the
marketing of a live web cast from the Cannes film festival. The
remaining increase is due to higher overhead costs relating to
our move from Vancouver British Columbia to New York City.
Loss From Impairment
We had losses from impairment during the three and nine months
ended September 30, 1999 of $1,386,876 and $4,208,376 due to the
fact that we had issued shares of our common stock in payment for
certain deliverables that we subsequently became aware did not
exist. There were no losses from impairment for the three and
nine months ended September 30, 2000.
Loss From Discontinued Operations:
During the three and nine months ended September 30, 1999, our
results of operations included approximately $356,439 and
$1,031,200 respectively, of losses relating to Street Solid, a
record label that we acquired on January 5, 1999. We disposed of
81% of our interest in Street Solid in October 1999, and
therefore the results of operations during 1999 of Street Solid
are accounted for as discontinued operations. During the three
and nine months ended September 30, 2000 we charged an additional
$127,000 to discontinued operations to record settlement of
litigation that arose as a result of Street Solid.
Interest Income:
Interest income for the three and nine months ended September 30,
2000 was $22,433 and $96,540,respectively, as compared to zero
for the three and nine months ended September, 1999. This is due
to larger cash and cash equivalents balances during the three and
six months ended September 30, 2000 resulting from the net
proceeds received by us from our private placements of shares of
our common stock.
Investment Expense:
Investment expense during the nine months ended September 30,
2000 represents a write-down of the Company's investment in
Turnkey Entertainment LLC.
Interest Expense:
Interest expense for the three and nine months ended September
30, 1999 was $14,095 and $340,806, respectively, of which
$333,333 was a result of a non-cash interest charge related to a
convertible debenture agreement, whereby such debentures would be
convertible into shares of our common stock at a 25% discount to
the market price. Interest expense for the three and nine months
ended September 30, 2000 was zero.
Extraordinary Item:
During the nine months ended September 30, 2000, we recorded
a gain on extinguishment of debt of $200,151. This was due to a
May 2000 settlement of $850,000 for a $1,050,151 debt. The
Settlement was during the second quarter of 2000.
Liquidity and Capital Resources.
Since inception through September 30, 2000, we had a deficit
accumulated during the development stage of approximately $17.9
million and expect to continue to incur substantial operating
losses for the next several years. We have financed our
operations primarily through private placements of our common
stock. From inception to September 30, 2000 we received proceeds
from the sale of equity securities, net of share issuance
expenses, of approximately $6 million. Cash proceeds from the
sale of our securities during the nine months ended September
30,2000 were approximately $5.6 million, including the $222,500
received in December 1999, compared to zero for the nine months
ended September 30, 2000.
We used net cash in operating activities of $2,388,379 for the
nine months ended September 30, 2000. Net cash and cash
equivalents used in operations for the nine months ended
September 30, 2000 consisted of the net loss from continuing
operations of $8,238,662 less non cash items of $6,013,764,
decrease in prepaid expenses of $7,102, increases in other assets
of $127,840 (which represented primarily of a security deposit
on our new premises), and decrease in accounts payable of
$35,641.
Net cash used in investing activities was $1,991,415 for the nine
months ended September 30, 2000. Investing activities included
payments for website costs of $306,072, a settlement payment to
the purchaser of Street Solid of $58,000, fixed assets additions
fo $146,000 and a strategic equity investment of $1.4 million in
a private company which is building an online product synergistic
with our core business and payment for licenses and rights
$81,517.
Net cash provided by financing activities was $5,208,602 for the
nine months ended September 30, 2000. Cash provided by financing
activities in 2000 consisted of proceeds from the sale of common
stock of $5,208,602.
Our capital funding requirements will depend on numerous factors,
including the progress and magnitude of the our website
development, marketing plans, technological advances, competitive
and market conditions, our ability to establish and maintain
collaborative arrangements, the cost of streaming video content
on the Internet and effectiveness of commercialization activities
and arrangements.
We are likely to require substantial funding to continue our
website development, marketing, sales, and administrative
activities. We have 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. We continue 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 us in exchange for marketing, distribution or other
rights to our products 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 us on acceptable terms,
if at all. Further, there can be no assurance that any
arrangements resulting from these discussions will successfully
reduce our funding requirements. If additional funding is not
available to us when needed, we will be required to scale back
our website development, marketing and administrative activities
and our business and financial results and condition would be
materially and adversely affected.
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On November 8, 2000 the Company settled a previously-filed
lawsuit with Destiny Music, Inc. for $325,000, of which $198,000
was previously recorded on the financial statements of the
Company. As of September 30, 2000 the Company recorded $127,000
of expense.
ITEM 2. CHANGES IN SECURITIES
1. During the first quarter of 2000 we entered into two
separate subscription agreements for the private placement
of shares of our Common Stock at a price of $1.50 per share.
We 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, we 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, we 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, we 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 our core business. We
issued 2,000,000 shares of our restricted common stock and
paid $1,400,000 in cash in exchange for 25% of the
outstanding stock of Turn-key Entertainment LLC.
6. On July 13, 2000, our Board of Directors approved a stock
option plan ("the Plan") and reserved 4 million shares of
our common stock to attract, motivate and retain individuals
upon whose continued efforts the success of the company in
large measure depends. On July 25th 2000, we issued
1,675,000 options pursuant to the Plan to certain employees,
officers, directors and consultants. The exercise price of
such options were $0.25 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 at a rate of
25% immediately with the remainder over a three year period
and expire July 2003.
7. On August 31, 2000 the Company entered into an agreement
with an investment bank to register and underwrite shares of
its common stock with an aggregate market value not to
exceed $40,000,000 to the general public. The company is
obligated to issue warrants to purchase 2,000,000 shares of
common stock to the investment bank, whether or not the
registration and proposed sale of shares to the public is
completed. The Company is also obligated to issue additional
warrants to the investment bank upon achieving certain
milestones in the registration process. The company
recorded such warrants at $600,000 which is included in
deferred offering costs.
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
Report on Form 8-K, dated October 25, 2000
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: November 14, 2000 By: /s/ Marc A. Pitcher
Marc A. Pitcher,
President & Director
