SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 2000
Commission file Number 0-27777
BLAGMAN MEDIA INTERNATIONAL, INC.
(MNS Eagle Equity Group I)
-------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Nevada 73-1129531
- ------------------ --------------------
(State or other (I.R.S. Employer
jurisdiction of Identification No.)
incorporation
or organization)
1901 Avenue of the Stars, Suite 1710, Los Angeles, California 90067
------------------------------------------------------ --------------
(Address of principal executive offices) (Zip Code)
(310) 788-5444
--------------------------------------------------
Registrant's telephone number, including area code
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [ X ] No [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes [ ] No [ ] N/A [ X ]
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date:
Common stock, par value $.001 per share
12,069,873 outstanding shares as of March 31, 2000
<PAGE>
BLAGMAN MEDIA INTERNATIONAL, INC.
(MNS Eagle Equity Group I)
Table of Contents
PART I - FINANCIAL INFORMATION
Page No.
Item 1. BLAGMAN MEDIA INTERNATIONAL, INC. 1
Balance Sheet as of March 31, 2000
Statement of Operations for the three
months ended March 31, 2000 and 1999
Consolidated Statement of Changes in Stockholders'
Equity for the Three Months Ended March 31, 2000
Statement of Cash Flows for the three months
ended March 31, 2000 and 1999
Notes to Financial Statements
Item 2. Management's Discussion and Analysis 1
PART II - OTHER INFORMATION 3
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
SIGNATURE PAGE 4
<PAGE>
PART I. FINANCIAL INFORMATION
PART 1. FINANCIAL STATEMENTS
The condensed statements of income, balance sheets, statements of cash
flows and financial notes are included in the Blagman Media International, Inc.
2000 first quarter interim report. This report is included as Item 1 and is
incorporated herein by reference as Exhibit 1.
The financial information referred to in the preceding paragraph is to be
read in conjunction with the following additional financial note:
The condensed balance sheet as of March 31, 2000 and the condensed
statements of income and the condensed statements of cash flows for the
three months ended March 31, 2000 and 1999 are unaudited. However, in the
opinion of management, all material adjustments necessary for the fair
presentation of interim period results have been included.
The results for the interim periods do not necessarily represent results to
be expected for the year.
PART 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THREE MONTHS ENDED MARCH 31, 1999:
The revenues of $424,714, Gross loss on revenues of $(37,866) and operating
expenses of $(346,107) which gave rise to a operating loss of $(383,973) for the
three months ended March 31, 2000. Other income (expense) is interest expense of
$3,127. The net (loss) for the above period was $(387,100).
The three months ended March 31, 1999 was mostly inactive and the results
of operations were immaterial and do not give rise to a measure of comparability
to the three months ended March 31, 2000.
The gross loss of $(37,866) on revenues of $424,714 was the result of
purchased media time exceeding revenue for the three months ended March 31,
2000. Approximately 73% of the revenues for the period was from two customers.
Both customers have contracts with the Company to share or split revenues based
upon the terms of the specific agreements. The shared fee arrangements were less
than the amount of purchased media time that the Company was obligated to pay.
Operating expenses of $346,107 were incurred as follows:
Officers compensation $ 74,500
Employer compensation & taxes 39,081
Travel and entertainment 57,920
Professional fees 91,854
---------
263,355
All other expenses 82,752
---------
$ 346,107
Travel and entertainment was spent on a combination of investigating a
lease for a New York City office, due diligence regarding some possible
acquisitions and developing new relationships to expand revenues. Professional
fees were to make the Company comply with the financial reporting requirements
of the Securities and Exchange Commission and the reverse acquisition of Unisat,
Inc. on August 2, 1999.
1
<PAGE>
FINANCIAL POSITION AND LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital is approximately $242,000 and the ratio is
1.62 to 1 which shows the financial condition is reasonably liquid at this point
in time. Cash balance at March 31, 2000 was $457,000 or 72% of current assets.
During the first quarter ending March 31, 2000 the Company received
approximately $792,000 in cash for private placement of its common stock under
Regulation D; Section 4(6) of the Securities Act of 1933 as amended. The
offering was for 1,250,000 shares totaling $1,000,000. The offering was fully
subscribed and the balance of the common stock subscription is approximately
$208,000. The offering price was at $.80 per common share.
Cash flows from operating activities was net cash used of $(240,000).
Receivables increased cash flow approximately $370,000 and payable reduced cash
flows approximately $(201,000). Depreciation was about $2,000 and other
transactions affecting cash flow were a reduction in cash flow from operations
of approximately $(24,000). The Company purchased $19,000 in equipment and cash
flows from financing activities increased cash flows by a common stock issuance
of $792,000 as mentioned earlier and repayment of its credit line of about
$75,000. Cash paid for interest expense during the period was $4,000.
The Company's line of credit with a bank provides that it can borrow up to
$75,000 at 2% over prime. The line matured on February 7,2000 and all principal
and interest due were paid.
The Company has notes and loans payable of about $130,000 at annual
interest rates ranging from 6% on a $50,000 note payable to a $13,600 loan on
demand at 9.5%. There is also a note payable to a related party due on demand
with no interest of $66,545.
Capital requirements for capital expenditures are anticipated to be minimal
for the balance of the year.
It is anticipated that revenues for the year 2000 improve for the balance
of the year ending December 31, 2000 even through the first quarter on an
annualized basis was substantially below the revenues of $3,182,000 generated
for year ended December 31, 2000. The Company needs to stop its loss trend and
improves its financial position and liquidity in order to realize its business
plan of growing through acquisition by exchanging its common stocks with
potential acquisition candidates.
2
<PAGE>
PART II. OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS
None
ITEM 2: CHANGES IN SECURITIES AND USE OF PROCEEDS
None
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
a) The following exhibits are included herein:
(1) Financial statements at March 31, 2000.
b) A report on Form 8-K was been filed by the Company on April 20, 2000.
3
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BLAGMAN MEDIA INTERNATIONAL, INC.
(MNS Eagle Equity Group I)
Dated: May 23, 2000 By: /s/ Robert Blagman
----------------------------------------
Robert Blagman
President and Chief Executive Officer
4
<PAGE>
EXHIBIT 1
BLAGMAN MEDIA INTERNATIONAL, INC.
AND SUBSIDIARY
CONTENTS
PAGE NO.
-------
CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 2000 F-1
CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE
MONTHS ENDED MARCH 31, 2000 F-2&3
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS'
EQUITY FOR THE THREE MONTHS ENDED MARCH 31, 2000 F-4
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE THREE
MONTHS ENDED MARCH 31, 2000 F-5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS
OF MARCH 31, 2000 F-6
<PAGE>
<TABLE>
<CAPTION>
BLAGMAN MEDIA INTERNATIONAL, INC.
AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<S> <C> <C>
March 31, 2000
(Unaudited) December 31, 1999
--------------------- ---------------------
ASSETS
CURRENT ASSETS
Cash $ 457,219 $ -
Accounts receivable 108,709 479,054
Other current assets 22,637 1,918
Loan receivable - stockholder 42,448 38,948
--------------------- ---------------------
Total Current Assets 631,013 519,920
PROPERTY AND EQUIPMENT - NET 24,359 6,942
--------------------- ---------------------
TOTAL ASSETS $ 655,372 $ 526,862
- ------------
===================== =====================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
CURRENT LIABILITIES
Notes and loans payable - current portion $ 130,152 $ 80,152
Line of credit - 74,713
Accounts payable and accrued expenses 259,244 460,587
--------------------- ---------------------
Total Current Liabilities 389,396 615,452
LONG-TERM LIABILITIES
Notes and loans payable - 50,000
--------------------- ---------------------
Total Liabilities 389,396 665,452
--------------------- ---------------------
STOCKHOLDERS' EQUITY (DEFICIENCY)
Common stock, $.001 par value, 100,000,000 shares
authorized, 13,321,540 and 12,069,873 shares issued
and outstanding 13,320 12,070
Additional paid-in capital 1,023,380 24,630
Accumulated deficit (562,390) (175,290)
--------------------- ---------------------
474,310 (138,590)
Subscriptions receivable (208,334) -
--------------------- ---------------------
Total Stockholders' Equity (Deficiency) 265,976 (138,590)
--------------------- ---------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY) $ 655,372 $ 526,862
- -------------------------------------------------------
===================== =====================
See accompanying notes to consolidated financial statements.
F-1
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BLAGMAN MEDIA INTERNATIONAL, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
(UNAUDITED)
<S> <C>
REVENUES - NET $ 424,714
COST OF REVENUES 462,580
-----------------
GROSS LOSS (37,866)
-----------------
OPERATING EXPENSES
Officers' compensation 74,500
Employee compensation and taxes 39,081
Travel and entertainment 57,920
Other general and administrative 38,698
Professional fees 91,854
Rent 7,628
Telephone 6,701
Advertising 27,237
Auto 594
Depreciation 1,894
----------------
Total Operating Expenses (346,107)
----------------
(LOSS) INCOME FROM OPERATIONS (383,973)
----------------
OTHER INCOME (EXPENSE)
Interest expense (4,039)
Interest income 912
----------------
Total Other (Expense) (3,127)
NET (LOSS) $ (387,100)
- ----------
=================
Net (loss) per common share - basic and diluted $ (0.03)
=================
Weighted average number of common shares
outstanding - basic and diluted 12,566,740
=================
See accompanying notes to consolidated financial statements.
</TABLE>
F-2
<PAGE>
<TABLE>
<CAPTION>
BLAGMAN MEDIA INTERNATIONAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2000
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Additional
Common Stock Paid-in Accumulated Subscriptions
Shares Amount Capital Deficit Receivable Total
------------- ----------- ------------ ------------ ------------- -----------
Balance, January 1, 1999 12,069,873 $ 12,070 $ 24,630 $ (175,290) $ - $ (138,590)
Stock issued for cash and subscribed to 1,251,667 1,250 998,750 - (208,334) 791,666
Net loss, March 31, 2000 - - - (387,100) - (387,100)
------------- ----------- ------------ ------------ ------------- -----------
BALANCE, MARCH 31, 2000 13,321,540 $ 13,320 $ 1,023,380 $ (562,390) $ (208,334) $ 265,976
- ----------------------- ============= =========== ============ ============ ============= ===========
See accompanying notes to consolidated financial statements.
</TABLE>
F-3
<PAGE>
<TABLE>
<CAPTION>
BLAGMAN MEDIA INTERNATIONAL, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
(UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C>
Net (Loss) Income $ (387,100)
Adjustments to reconcile net (loss) to net cash
(used in) operating activities:
Depreciation 1,894
Changes in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable 370,395
Other current assets (20,719)
Loan receivable - stockholder (3,500)
Increase (Decrease) in:
Accounts payable and accrued expenses (201,343)
---------------
Net cash (used in) operating activities (240,423)
---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (19,311)
---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from stock issuance 791,666
Line of credit repayment (74,713)
---------------
Net cash provided by financing activities 716,953
---------------
NET INCREASE IN CASH 457,219
CASH - BEGINNING OF PERIOD -
---------------
CASH - END OF PERIOD $ 457,219
- --------------------
===============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for - Interest $ 4,039
===============
See accompanying notes to consolidated financial statements.
</TABLE>
F-4
<PAGE>
BLAGMAN MEDIA INTERNATIONAL, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2000
(UNAUDITED)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION
- ------ -----------------------------------------------------------
(A) Organization
Blagman Media International, Inc. (the "Company") was formed
on January 29, 1999 upon incorporation from a sole partnership.
The Company is a global direct response marketing and advertising
agency that produces response-driven infomercials, and provides
product placement, media buying, medical marketing, production
and syndication of television programming, and other associated
transactional media business pursuits.
On August 2, 1999 one hundred percent of the issued and
outstanding common stock of Blagman Media International, Inc. was
acquired by Unisat, Inc. in a transaction accounted for as a
recapitalization of Blagman Media International, Inc. Unisat,
Inc. subsequently changed its name to Blagman Media
International, Inc. (See Note 10)
(B) Basis of Presentation
The accompanying unaudited financial statements have been
prepared in accordance with generally accepted accounting
principles and the rules and regulations of the Securities and
Exchange Commission for interim financial information. The
accompanying consolidated financial statements do not include the
statement of operations or cash flows for the three months ended
March 31, 1999 since the Company operations for this period were
immaterial.
(C) Principles of Consolidation
The accompanying consolidated financial statements include
the accounts of the Company and its wholly owned subsidiary. All
significant inter-company transactions and balances have been
eliminated in consolidation.
(D) Use of Estimates
In preparing financial statements in conformity with
generally accepted accounting principles, management is required
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial
statements and revenues and expenses during the reported period.
Actual results could differ from those estimates.
(E) Cash and Cash Equivalents
For purposes of the cash flow statements, the Company
considers all highly liquid investments with original maturities
of three months or less at the time of purchase to be cash
equivalents.
(F) Fair Value of Financial Instruments
F-5
<PAGE>
BLAGMAN MEDIA INTERNATIONAL, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2000
(UNAUDITED)
Statement of Financial Accounting Standards No. 107,
"Disclosures about Fair Value of Financial Instruments", requires
disclosures of information about the fair value of certain
financial instruments for which it is practicable to estimate the
value. For purposes of this disclosure, the fair value of a
financial instrument is the amount at which the instrument could
be exchanged in a current transaction between willing parties
other than in a forced sale or liquidation.
The carrying amounts of the Company's accounts receivable,
loan receivable, accounts payable and accrued liabilities, and
notes and loans payable, approximates fair value due to the
relatively short period to maturity for these instruments.
(G) Property and Equipment
Property and equipment are stated at cost and depreciated,
using accelerated methods over the estimated economic useful
lives of 5 to 7 years. Expenditures for maintenance and repairs
are charged to expense as incurred. Major improvements are
capitalized.
(H) Revenue Recognition
The Company recognizes revenue from the sale of media time
to advertising clients when the related advertisement is
broadcasted. In addition, they earn commissions in connection
with the procurement of media time on behalf of advertising
clients. Such commissions are also considered earned when the
underling advertisement is broadcasted. Additionally, the Company
has entered into contractual agreements with other advertising
firms to share revenues based upon the terms of the specific
agreements. The income produced by these revenue-sharing
contracts are recognized as media or commission income depending
upon the nature of the income earned from the agreement.
(I) Income Taxes
The Company accounts for income taxes under the Financial
Accounting Standards Board Statement of Financial Accounting
Standards No. 109 "Accounting for Income Taxes" ("Statement
109"). Under Statement 109, deferred tax assets and liabilities
are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases.
Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or
settled. Under Statement 109, the effect on deferred tax assets
and liabilities of a change in tax rates is recognized in income
in the period that includes the enactment date.
(J) Concentration of Credit Risk
The Company maintains its cash in bank deposit accounts,
which, at times, may exceed federally insured limits. The Company
has not experienced any losses in such accounts and believes it
is not exposed to any significant credit risk on cash and cash
equivalents.
F-6
<PAGE>
BLAGMAN MEDIA INTERNATIONAL, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2000
(UNAUDITED)
(K) Earnings (Loss) Per Share
Net income (loss) per common share for the three months
ended March 31, 2000 is computed based upon the weighted average
common shares outstanding as defined by Financial Accounting
Standards No. 128, "Earnings Per Share". Common stock equivalents
at March 31, 2000 have not been included in the computation of
diluted earnings per share since the effect would be
anti-dilutive. At March 31, 2000 there were 100,000 common stock
options outstanding which could potentially dilute future
earnings per share.
(L) Segment Information
The Company follows Statement of Financial Accounting
Standards No. 131 "Disclosures about Segments of an Enterprise
and Related Information." During the three months ended March 31,
2000, the Company only operated in one segment, therefore,
segment disclosure has not been presented.
(M) Recent Accounting Pronouncements
The Financial Accounting Standards Board has recently issued
several new accounting pronouncements. Statement No. 133,
"Accounting for Derivative Instruments and Hedging Activities",
as amended by Statement No. 137, establishes accounting and
reporting standards for derivative instruments and related
contracts and hedging activities. This statement is effective for
all fiscal quarters and fiscal years beginning after June 15,
2000. The Company believes that its adoption of pronouncement No.
133, as amended by No. 137, will not have a material effect on
the Company's financial position or results of operations.
(N) Stock Options
In accordance with Statement of Financial Accounting
Standards No. 123, "Accounting For Stock Based Compensation"
("SFAS 123"), the Company has elected to account for Stock
Options issued to a loan guarantor in accordance with SFAS 123.
NOTE 2 LOAN RECEIVABLE - STOCKHOLDER
- ------ -----------------------------
The loans are uncollateralized and non-interest bearing.
NOTE 3 PROPERTY AND EQUIPMENT
- ------ ----------------------
The following is a summary of property and equipment at March 31:
Computer equipment $ 21,660
Furniture and fixtures 15,270
Office equipment 12,882
--------------
49,812
Less: Accumulated depreciation (25,453)
--------------
Property and equipment - net $ 24,359
==============
Depreciation expense was $1,894 for the period ended
March 31, 2000.
F-7
<PAGE>
BLAGMAN MEDIA INTERNATIONAL, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2000
(UNAUDITED)
NOTE 4 NOTES AND LOANS PAYABLE
- ------ -----------------------
The following schedule reflects notes and loans payable at
March 31, 2000:
Note payable, interest at 6% due March 31, 2001.
In addition, the Company provided an option to
purchase up to 100,000 shares of common stock,
at $0.25 per share, at any time until September
1, 2000. (See Note 6) $ 50,000
Note payable - related party, due on demand with
no interest. 66,545
Loan payable, interest at 9.5%, due on demand. 13,607
-----------
130,152
Less current portion 130,152
-----------
Notes and loans payable - no current $ -
===========
NOTE 5 LINE OF CREDIT
- ------ --------------
The Company had a line of credit agreement with a bank that
provided that it could borrow up to $75,000 at 2% over Prime. The
line matured on February 7, 2000 and all principal and interest
due was paid.
NOTE 6 EQUITY
- ------ ------
(A) Common Stock Issuance
The Company issued 50,000 shares of common stock as
consideration for services. The shares were valued, for financial
accounting purposes, at $.25 per share, based upon the quoted
trading price at the grant date, resulting in a consulting
expense of $12,500.
(B) Common Stock Offering
On February 16, 2000, the Board of Directors agreed to offer
up to 1,250,000 shares of common stock, pursuant to Regulation D,
Section 4(6) of the Securities Act of 1933, as amended, at $0.80
per share. The offer was fully subscribed to by March 31, 2000
and $791,666 of the total subscription of $1,000,000 had been
received.
(C) Stock Options Granted Under Loan Guarantee Agreement
For options issued in connection with a note (See Note 4),
the Company applies SFAS 123. Accordingly, a loan fee of $16,000
was charged to operations in the year ended December 31, 1999.
F-8
<PAGE>
BLAGMAN MEDIA INTERNATIONAL, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2000
(UNAUDITED)
For financial statement disclosure purposes and for purposes
of valuing stock options issued to new employees, the fair market
value of each stock option granted estimated on the date of grant
using the Black-Scholes Options-Pricing Model in accordance SFAS
123, using the following weighted-average assumptions: expected
dividend yield of 0%, risk-free rate of 5.2%, volatility of 180%
and expected term of one year.
A summary of the options under the loan guarantee agreement
as of March 31, 2000 is presented below:
<TABLE>
<CAPTION>
<S> <C> <C>
Number of Weighted Average
Options Exercise Price
------------------ ------------------
Stock Options
Balance at beginning of period 100,000 $ 0.25
Granted - -
Exercised - -
Forfeited - -
------------------ -----------------
Balance at end of period 100,000 $ 0.25
================== =================
Options exercisable at end of period 100,000 $ 0.25
Weighted average fair value of options
granted during the year - $ -
</TABLE>
<TABLE>
<CAPTION>
The following table summarizes information about stock
options outstanding at March 31, 2000:
<S> <C> <C> <C> <C> <C> <C>
Options Outstanding Options Exercisable
- ----------------------------------------------------------------------------- ------------------------------------
Weighted
Average Weighted Number Weighted
Range of Number Remaining Average Exercisable at Average
Exercise Outstanding at Contractual Exercise March Exercise
Price March 31, 2000 Life Price 31, 2000 Price
------------- ----------------- ---------------- ------------- ----------------- ---------------
$ 0.25 100,000 0.50 Year $ 0.25 100,000 $ 0.25
</TABLE>
F-9
<PAGE>
BLAGMAN MEDIA INTERNATIONAL, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2000
(UNAUDITED)
NOTE 7 COMMITMENTS AND CONTINGENCIES
- ------ -----------------------------
(A) Operating Lease
On February 29, 2000, the Company entered into a new lease
agreement for corporate offices. The lease term is for 37 months.
The monthly base rent is $9,089 commencing March 1, 2000. Minimum
annual rentals under this lease are as follows:
Years Ending
March 31 Amount
------------ -----------
2001 $ 109,068
2002 109,068
2003 109,068
2004 18,178
(B) Consulting Agreements
On December 2, 1999, the Company entered into a six-month
agreement with a consulting firm to provide management
consulting, business advisory, shareholder information, and
public relations advice. The agreement calls for compensation
based on proposed fees for services to be rendered.
On December 1, 1999, the Company entered into a five-year
agreement with a consultant where the consultant will provide
advisory business services. The agreement called for the
consultant to receive 25,000 shares of the Company's common stock
upon execution of the agreement, and an additional 25,000 shares
upon expiration of each quarter year during the first year term
to an aggregate of 100,000 shares. None of the above shares were
issued. On March 21, 2000, the parties entered into a settlement
agreement and mutual release and the Company will issue 50,000
shares of common stock as consideration after March 31, 2000.
(C) Legal Actions
On April 1, 1999, a Nevada Corporation filed suit against
the Company, its former Chairman of the Board and a former
director in the Second Judicial District Court of the State of
Nevada, in and for the County of Washoe. In the complaint, the
plaintiff alleged intentional interference with contractual
relations between the Company and a third party, intentional
interference with prospective economic advantage, conspiracy,
unfair business practices, breach of fiduciary duty, unjust
enrichment, rescission of contract, incomplete accounting and
permanent injunction. On February 7, 2000, the parties to the
legal action stipulated that the alleged complaints in the
lawsuit be dismissed without prejudice.
NOTE 8 CONCENTRATIONS
- ------ --------------
Approximately 73% of revenues were derived from two
customers for the period ended March 31, 2000. Approximately 46%
and 19% of accounts receivable was due from two customers as of
March 31, 2000.
F-10
<PAGE>
BLAGMAN MEDIA INTERNATIONAL, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2000
(UNAUDITED)
NOTE 9 INCOME TAXES
- ------ ------------
In 1998, the Company was a sole-proprietorship and the
proprietor was responsible for all taxes personally.
There was no income tax (benefit) for the three months ended
March 31, 2000 as the Company incurred a loss.
The tax effects of temporary differences that gave rise to
significant proportions of deferred tax assets and liabilities at
March 31, 2000 are as follows:
Deferred tax assets:
Net operating loss carryforward $ 172,700
-------------
Total gross deferred tax assets 172,700
Less valuation allowance (172,700)
-------------
Net deferred tax assets $ -
=============
At March 31, 2000, the Company had a net operating loss
carryforward of approximately $508,000 for U.S. Federal income
tax purposes available to offset future taxable income expiring
on various dates beginning in 2016 through 2018.
The valuation allowance at January 1, 2000 was $32,370. The
net change in the valuation allowance during the period ended
March 31, 2000 was an increase of approximately $140,330.
NOTE 10 BUSINESS COMBINATIONS
- ------- ---------------------
(A) Acquisition and Recapitalization - Unistat, Inc.
Under a Stock Exchange Agreement (the "Agreement")
consummated on August 2, 1999, Unisat, Inc., ("Unisat"), a
non-reporting public shell with no operations at that time,
acquired one hundred percent of the issued and outstanding common
stock (9,000,000 shares) of Blagman Media International, Inc.
("Blagman") in exchange for 8,200,000 shares of the $0.001 par
value common stock of Unisat. As a result of the exchange, the
Company became a wholly owned subsidiary of Unisat and the
stockholders of Blagman become stockholders of approximately
sixty-eight percent of Unisat. Generally Accepted Accounting
Principles require that the Company whose shareholders retain a
majority interest in a business combination be treated as the
acquiror for accounting purposes. As a result, the exchange was
treated as an acquisition of Unisat by Blagman, and a
recapitalization of Blagman. The Company's consolidated financial
statements immediately following the acquisition were as follows:
(1) The Balance Sheet consists of Blagman's net assets at
historical cost and Unisat's net assets at historical cost and
(2) the Statement of Operations includes Blagman's operations for
the period presented and Unisat's operations from the date of
acquisition. The Company filed an amendment to its articles of
incorporation to change its name from Unisat, Inc. to Blagman
Media International, Inc.
F-11
<PAGE>
BLAGMAN MEDIA INTERNATIONAL, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2000
(UNAUDITED)
NOTE 11 SUBSEQUENT EVENTS
- ------- -----------------
(A) Acquisition and Recession Agreements
Under a Stock Exchange Agreement (the "Agreement)
consummated in 2000, the Company was to acquire Mullinger Media &
Communications, Ltd. ("MMC") in exchange for 600,000 shares of
Series A Preferred Stock of the Company. As a result of the
exchange, MMC would have become a wholly owned subsidiary of the
Company. Subsequent thereto, the Company rescinded this agreement
for failure of consideration and other deficiencies.
(B) Stock Exchange Agreement
Pursuant to a Stock Exchange Agreement (the "Exchange
Agreement") dated as of April 20, 2000 between the Company and
the shareholders of MNS Eagle Equity Group I, Inc. ("MSN"), a
Nevada Corporation, approximately 89.9% of the outstanding shares
of common stock of which is held by (10) MNS shareholders were
exchanged for 50,000 shares of common stock of the Company and
$100,000 cash in a transaction in which the Company effectively
became the parent corporation of MNS.
The Exchange Agreement was adopted by the unanimous consent
of the Board of Directors of the Company and MNS on April 20,
2000. No approval of the shareholders of either the Company or
MNS is required under applicable state corporate law.
F-12
<PAGE>
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