UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
AMENDMENT NO. 2 TO FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended June 30, 2000 Commission File Number 0-28555
DEERBROOK PUBLISHING GROUP, INC.
NEVADA 86-0960464
------------------------------- ----------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
12919 S.W. Freeway, Suite 170, Safford, Texas 77477
--------------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
281-494-4734
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(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or, for such 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 August 15, 2000, there were 9,490,547 shares of common stock outstanding.
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DEERBROOK PUBLISHING GROUP AND SUBSIDIARIES
Index to Form 10-QSB/A
For the Quarter Ended June 30, 2000
PART I. FINANCIAL INFORMATION PAGE NO.
--------
Item 1. Financial Statements
Consolidated Balance Sheets
June 30, 2000 (Unaudited) and September 30, 1999................ 3
Consolidated Statements of Operations (Unaudited)
for the Three and Nine Months ended June 30, 2000 and 1999...... 4
Consolidated Statements of Cash Flows (Unaudited)
for the Three and Nine Months ended June 30, 2000 and 1999...... 5
Notes to Financial Statements................................... 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations................... 7
PART II. OTHER INFORMATION............................................... 8
Signatures...................................................... 9
2
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PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
DEERBROOK PUBLISHING GROUP, INC. AND SUBSIDIARIES
BALANCE SHEETS
<TABLE>
<CAPTION>
(UNAUDITED)
JUNE 30, SEPTEMBER 30,
2000 1999
ASSETS ----------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents ......................................... $ 5,571 $ 36,066
Accounts receivable - trade, net .................................. -- 20,000
Prepaid expenses and other current assets ......................... 94,406 143,800
----------- -----------
TOTAL CURRENT ASSETS .......................................... 99,977 199,866
Property and equipment, net ......................................... 100,873 118,918
Goodwill ............................................................ 113,442 458,318
Net assets of discontinued operations ............................... 44,880 58,267
Inventory ........................................................... 149,239 160,239
----------- -----------
TOTAL ASSETS ........................................................ $ 508,411 $ 995,608
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Notes payable to related parties .................................. $ 61,626 $ 30,000
Obligation under capital lease - current portion .................. 154,820 17,143
Accounts payable .................................................. 458,149 243,504
Accrued payroll ................................................... 400,000 227,399
Other liabilities ................................................. 68,682 53,465
----------- -----------
TOTAL CURRENT LIABILITIES ..................................... 1,143,277 571,511
Obligation under capital lease - long-term portion .................. -- 95,507
----------- -----------
TOTAL LIABILITIES ................................................... 1,143,277 667,018
----------- -----------
COMMITMENTS: ........................................................ -- --
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock; $.001 par value (10,000,000 shares authorized).... -- --
Common stock; $.001 par value (25,000,000 shares authorized)....... 9,490 9,968
Additional paid in capital ........................................ 2,878,337 2,028,935
Common stock subscribed ........................................... 100,000 --
Warrants .......................................................... 451,000 --
Accumulated deficit ............................................... (4,073,693) (1,710,313)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) ................................ (634,866) 328,590
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY .......................... $ 508,411 $ 995,608
=========== ===========
</TABLE>
3
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DEERBROOK PUBLISHING GROUP, INC. AND SUBSIDIARIES
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
(UNAUDITED) (UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
JUNE 30, JUNE 30,
-------------------------- --------------------------
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues ....................................... $ -- $ 16,486 $ 1,123 $ 24,361
Cost of Revenues ............................... -- 2,518 4,899 6,062
----------- ----------- ----------- -----------
Gross Profit (Loss) ............................ -- 13,968 (3,776) 18,299
General and Administrative Expenses ............ (141,328) (60,474) (1,666,527) (74,929)
Acquisition Costs .............................. -- -- (318,100) --
Other Income ................................... -- -- -- --
Interest Expense ............................... -- -- -- --
----------- ----------- ----------- -----------
Loss from Continuing Operations before
Income Taxes................................... (141,328) (46,506) (1,988,403) (56,630)
Income Taxes ................................... -- -- -- --
----------- ----------- ----------- -----------
Loss from Continuing Operations ................ (141,328) (46,506) (1,988,403) (56,630)
Loss from Discontinued Operations .............. -- -- (374,977) --
----------- ----------- ----------- -----------
Net Loss ....................................... (141,328) (46,506) (2,363,380) (56,630)
Accumulated deficit, beginning of period........ (3,932,365) (297,411) (1,710,313) (287,287)
----------- ----------- ----------- -----------
Accumulated deficit, end of period ............. $(4,073,693) $ (343,917) $(4,073,693) $ (343,917)
=========== =========== =========== ===========
Basic Loss Per Share:
Loss from Continuing Operations ............... $ (0.01) $ -- $ (0.21) $ --
Loss from Discontinued Operations.............. -- -- (0.04) --
----------- ----------- ----------- -----------
Net Loss ....................................... $ (0.01) $ -- $ (0.25) $ --
=========== =========== =========== ===========
Weighted Average Shares Outstanding ............ 9,465,548 5,367,712 9,276,404 4,535,474
=========== =========== =========== ===========
</TABLE>
4
<PAGE>
DEERBROOK PUBLISHING GROUP, INC. AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(UNAUDITED) (UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
JUNE 30, JUNE 30,
-------------------------- ----------------------------
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS:
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss .................................................. $ (141,328) $ (46,506) $(2,363,380) $ (56,630)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization ............................ 29,582 -- 86,176 --
Impairment of long-term asset ............................ -- -- 276,745 --
Common stock issued for acquisition costs and services.... -- -- 848,924 --
Net assets acquired in acquisition ....................... -- -- -- (8,233)
Change in net assets of discontinued operations .......... -- -- 13,387 --
Expenses paid by related party ........................... 31,626 -- 31,626 --
Forfeit of deposit ....................................... -- -- 318,100 --
CHANGES IN ASSETS AND LIABILITIES:
Accounts receivable ...................................... -- -- -- --
- trade ................................................ -- -- 20,000 --
- related entity ....................................... -- (48,466) -- (39,922)
Prepaid expenses and other current assets ................ -- -- 49,394 --
Inventory ................................................ -- (2,145) 11,000 (36,167)
Deferred offering costs .................................. -- -- -- --
Accounts payable ......................................... 8,920 -- 214,645 45,046
Accrued payroll .......................................... 43,374 -- 172,601 --
Other liabilities ........................................ (42,168) 966 15,216 966
----------- ----------- ----------- -----------
NET CASH USED BY OPERATING ACTIVITIES ............... (69,994) (96,151) (305,566) (94,940)
----------- ----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment ........................ -- (3,610) -- (3,610)
Deposit ................................................... -- -- (318,100) --
----------- ----------- ----------- -----------
NET CASH USED BY INVESTING ACTIVITIES ............... -- (3,610) (318,100) (3,610)
----------- ----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt ........................................ -- -- 42,171 --
Proceeds from issuance of stock and warrants .............. -- 100,000 551,000 100,000
----------- ----------- ----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES ........... -- 100,000 593,171 100,000
----------- ----------- ----------- -----------
Net change in cash and cash equivalents .................... (69,994) 239 (30,495) 1,450
Cash and cash equivalents at beginning of period ........... 75,565 1,211 36,066 --
----------- ----------- ----------- -----------
Cash and cash equivalents at end of period ................. $ 5,571 $ 1,450 $ 5,571 $ 1,450
=========== =========== =========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid ............................................. $ -- $ -- $ -- $ --
=========== =========== =========== ===========
Taxes paid ................................................ $ -- $ -- $ -- $ --
=========== =========== =========== ===========
NONCASH INVESTING AND FINANCING ACTIVITIES:
Common stock issued for acquisition costs and services..... $ -- $ -- $ 848,924 $ 173,340
=========== =========== =========== ===========
Payment of various expenses by a related entity ........... $ 31,626 $ -- $ 31,626 $ --
=========== =========== =========== ===========
</TABLE>
5
<PAGE>
DEERBROOK PUBLISHING GROUP, INC. AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF PRESENTATION:
The unaudited financial statements include only the accounts and transactions of
Deerbrook Publishing Group, Inc. (the "Company") and its wholly-owned
subsidiaries.
INTERIM FINANCIAL STATEMENTS:
The unaudited interim financial statements include all adjustments (consisting
of normal recurring accruals), which, in the opinion of management, are
necessary in order to make the financial statements not misleading. Operating
results for the three and nine months ended June 30, 2000 are not necessarily
indicative of the results that may be expected for the entire year ending
September 30, 2000. These financial statements have been prepared in accordance
with the instructions to Form 10-QSB and do not contain certain information
required by generally accepted accounting principles. These statements should be
read in conjunction with the financial statements and notes thereto included in
the Company's Form 10SB.
NOTE 2 - CAPITAL LEASE OBLIGATION:
During the nine-month period ended June 30, 2000, the Company defaulted on a
capital lease obligation. Therefore, all lease payments have been reflected as
current as of June 30, 2000.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
SALES REVENUE
Sales for the three-month period ended June 30, 2000 (the "reporting quarter")
were $0, a decrease of $16,486 from the three month period ended June 30, 1999
(the "comparable quarter"). Sales for the nine months ended June 30, 2000 (the
"reporting period") totaled $1,123, down $23,238 from the nine month period
ended June 30, 1999 (the "comparable period"). These decreases were primarily
due to the closure of the Company's printing and publishing facilities and
management's focus on efforts to raise capital to finance the Internet
operations.
OPERATING EXPENSES
The Company's general and administrative expenses increased from $60,474 in the
comparable quarter to $141,328 for the reporting quarter and from $74,929 in the
comparable period to $1,666,527 for the reporting period. The increases were due
primarily to website development and maintenance, salaries, and professional
fees.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 2000, the Company's cash and cash equivalents totaled $5,571. In
addition, the Company's net worth and working capital (deficit) totaled
$(634,866) and $(1,043,300), respectively.
We currently do not have meaningful cash resources or cash flows from operations
to support our business. The future success of our business currently depends
upon our ability to raise additional capital. We currently are seeking
additional sources of financing, which may include one or more private
placements of debt or equity securities. We can provide no assurance that any
additional financing will be available on terms that are acceptable to us, if at
all. Our inability to obtain such financing could result in our inability to
continue as a going concern. If such financing is not available in sufficient
amounts or on satisfactory terms, we also may be unable to expand our business
or to develop new customers at the rate desired, and the lack of capital could
have a material adverse effect on our business.
7
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable.
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
Exhibit 27.1: Financial Data Schedule
(b) REPORTS ON FORM 8-K
Not applicable.
8
<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 authorized.
Date: September 15, 2000 DEERBROOK PUBLISHING GROUP, INC.
By: /s/ Mark L. Eaker
-----------------------------------
Mark L. Eaker, President and
Chief Executive Officer
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