U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 for the period ended March 31, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 for the transition period from _______ to _______
COMMISSION FILE NUMBER: 000-28657
PEOPLESWAY.COM, INC.
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(Exact name of small business issuer as specified in its charter)
Nevada 87-0374559
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(State or other jurisdiction of (IRS Employer identification
incorporation or organization) No.)
2969 Interstate Street, Charlotte, North Carolina 28208
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(Address of principal executive offices)
(704) 393-1860
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(Issuer's telephone number)
Securities registered pursuant to Section 12(b) of the Exchange Act:
None
Securities registered pursuant to Section 12(g) of the Exchange Act:
$0.001 Par Value Common Voting Stock
(Title of Class)
Check whether the issuer (1) filed all reports required to be filed by Section13
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[ ] No[x]
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or an
amendment to this Form 10-KSB. [x]
State issuer's net revenues for its most recent fiscal year: $316,040
As of December 29, 2000 there were 12,932,328 common shares outstanding and the
aggregate market value of the common shares (based upon the average of the bid
price ($.25) reported by brokers), held by non-affiliates was approximately
$3,233,082. Transitional Small Business Disclosure Format (check one): Yes[ ]
No[X]
Number of shares of common stock outstanding as of December 29, 2000: 12,932,328
Number of shares of preferred stock outstanding as of December 29, 2000: -0-
The rest of this page is left intentionally blank
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PART I
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Item 1. Business
Overview of Business
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Peoplesway.Com, Inc. ("Peoplesway") is an electronic commerce and Internet
services company that maintains an Internet destination called "Peoplesway,"
located at www.peoplesway.com. The Peoplesway Web site offers goods and services
for sale, including: cosmetics and beauty products, health supplements, jewelry,
specialty items, and flowers, which can be obtained directly through the Web
site, or by calling our customer service team members. The majority of our
goods and services are available through an alliance with DRM, Inc. and its
member network of approximately 14,000 independent contractors who may purchase
and sell Peoplesway products and services through the use of our Web site. We do
not retain an inventory of any product we sell. Payment comes directly to
Peoplesway from customers through a secure Internet server that accepts credit
card transactions. We then forward these orders to DRM or other vendors, who
then will drop ship products to customers as orders are received through our
Peoplesway Web sites.
Recent History
---------------
Peoplesway, Inc., a closely-held North Carolina corporation incorporated in
August 1999, was acquired by Prospector Energy, Inc. ("Prospector") in a reverse
acquisition, as a wholly-owned subsidiary on September 1, 1999 in a stock for
stock tax free exchange, whereby all outstanding shares of Peoplesway were
exchanged for 12,500,000 shares of Prospector. At inception, Prospector was
authorized to issue 30,000,000 shares of common voting stock, par value one cent
($0.01) per share. Pursuant to the acquisition of Peoplesway and resulting
amendments to the articles of incorporation, the authorized shares of common
stock increased to 100,000,000, the par value was changed to $.001, a 400 to 1
reverse split of Prospector's common stock was effected, resulting in 107,328
shares being issued and outstanding immediately prior to the acquisition, and
the company changed its name to Peoplesway.com, Inc. Following the conversion of
a convertible debenture, there was an additional 3,000,000 shares outstanding,
for a total of 15,607,969 shares of common stock as of March 31, 2000. During
November 2000, 2,675,000 of the shares from this convertible debenture were
returned to the treasury and retired.
All references in this document to "Peoplesway", "the Company" or "us",
"we" or "our", refer to the Nevada parent, formerly known as Prospector Energy,
Inc., and the North Carolina subsidiary. The principal offices of Peoplesway are
located at 2969 Interstate Street, Charlotte, North Carolina 28208, and its
phone number is (704) 393-1860.
Prior History
--------------
Peoplesway was organized as a Utah corporation on October 30, 1980, for the
purpose of purchasing, owning, holding, selling, disposing of and otherwise
dealing in the oil and gas business and other natural resources. It became a
public company through an offering of common stock to residents of the State of
Utah, pursuant to an exemption from registration under then-existing Rule 147,
Securities Act of 1933. Following the offering, Prospector acquired an interest
in Four Winds Mineral Venture, a Louisiana partnership that held a 66% interest
in a Costa Rican oil and gas company, in exchange for the issuance 11,250,000
shares of common stock. This acquisition proved unsuccessful, and thereafter
business operations ceased and the company was dormant from 1983 until 1997,
when it actively began seeking a merger or acquisition candidate, which it
accomplished in 1999 when it entered into the Acquisition Agreement with
Peoplesway. As Prospector never left the development stage and was dormant until
1997, we have re-designated our inception date to be January 1, 1997.
Charter Amendments
-------------------
The following amendments to the Articles of Incorporation have been effected
since we were organized:
- Effected a name change from Prospector Energy, Inc. to Peoplesway.Com,
Inc., effective September 13, 1999.
- Effected a 400 to 1 reverse split of the common stock, effective September
22, 1999.
- Increased the authorized capital to 100,000,000 shares, effective
September 22, 1999.
- Changed domicile from the State of Utah to the State of Nevada on
September 24, 1999.
Copies of the initial Articles of Incorporation, these amendments and the
Bylaws are attached hereto and incorporated herein by reference.
Internet Commerce
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The Internet is a worldwide series of interconnected electronic and/or
computer networks. Individuals and companies have recently recognized that the
technological capabilities of the Internet provide a medium for not only the
promotion and communication of ideas and concepts, but also for the presentation
and sale of information, goods and services. According to statistics reported by
the Computer Industry Almanac, there are projected to be 110 million Internet
users in the United States by the end of 1999, and nearly 14 million users in
Canada by year-end. Of this number, approximately 25% purchase goods and
services online, according to a December 1999 study by Scarborough Research.
Historically, the Internet has been accessible principally through personal
computers. Recently, several companies have announced "Web TV" products designed
for attachment to television sets for the purpose of allowing access to the
Internet without the need for a personal computer. Although these products do
not permit the full range of functions provided by personal computers, they do
permit many of the features of the Internet to be viewed on television sets.
Management believes that the new Web TV products are expected to substantially
increase the number of people who will shop online by accessing the Internet.
Already, online purchases have increased 100% in the past year, according to a
November, 1999 study by Yankelovich Partners, Inc.
The term "Internet commerce" encompasses the use of the Internet for
selling goods and services. The use of the Internet as a marketing and
advertising tool is enhanced by the ability to communicate information through
the Internet to a large number of individuals, businesses and other entities.
Because of the "virtual" nature of electronic commerce, the online presence
for certain merchants can significantly reduce or eliminate the costs of
maintaining a physical retail facility. Online merchants can also achieve
significant savings by eliminating traditional product packaging, print
advertising and other point of purchase materials. Marketing on the Internet can
be especially advantageous for smaller companies because it removes many
physical and capital barriers to entry and serves to level the competitive
playing field by allowing smaller companies to effectively compete with larger
companies.
Internet Security
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One of the largest barriers to a potential customer's willingness to
conduct commerce over the Internet is the perceived ability of unauthorized
persons to access and use personal information about the user, such as credit
card account numbers, social security numbers and bank account information.
Concerns about the security of the Internet include the authenticity of the user
(i.e., is the user accurately identified), verification and certification
methods of who these users are, and privacy protection for access to private
information transmitted over the Internet. However, recent advances in this area
have greatly reduced the possibility of such unauthorized access or use. IMC
Worldwide, Inc. provides our Unix-based computer system and hosts our Web site
and our independent contractor Web sites, employing state-of-the-art encryption
software to ensure the privacy and protection of our customers. We have not
experienced any occasion in which a user's credit card was misappropriated while
transacting business on Peoplesway.
Alliance with DRM
-------------------
The majority of our goods and services are available through an alliance
with DRM, Inc. and its subsidiaries, RMC Group, Inc. and RMC Group Canada, Ltd.
("DRM"). DRM began offering health and beauty products in 1982, and its sales
from inception have exceeded $250,000,000 from both U.S. and Canada operations.
It has a member network of approximately 14,000 independent contractors who may
purchase and sell Peoplesway products and services through the use of our Web
site. Peoplesway has established agreements with DRM to market and sell to DRM
independent contractors. RMC Group, Inc. was established in 1993 and took over
the distribution rights for the United States from DRM. In 1998 RMC became a
subsidiary of DRM. RMC Group Canada, Ltd. was established in 1987 as a
subsidiary of DRM. It was established to service the Canadian Market.
Products and Services
-----------------------
Products and services currently offered by Peoplesway include:
Health and beauty products. Peoplesway offers approximately 50 products
through DRM from their Rose Marie Collection, including cosmetics, personal
hygiene products, skin care, hair care, and bath products. In addition, DRM
supplies Body Management System nutritional products, including weight loss and
anti-aging supplements. DRM manufactures and packages these products through a
licensing agreement with a health and beauty product manufacturer.
Jewelry. Peoplesway offers silver and gold chains, earrings, bracelets and
rings, through an agreement between DRM and a jewelry wholesaler.
Flowers. Peoplesway offers fresh flowers and arrangements delivered to
your door, through an arrangement with Proflowers.Com, Inc.
We have an agreement with DRM and their subsidiaries that covers pricing,
invoicing and terms for transactions with Peoplesway.com. The agreement is
considered to have prices and terms similar to current average market for these
products.
Marketing and Advertising
---------------------------
By leveraging the DRM sales force, we are simultaneously opening Internet
Web sites and marketing the current Peoplesway product lines. Each independent
contractor is encouraged by Peoplesway and DRM to open a sub-Web site at
Peoplesway.com. For example, John Doe would have a site address of
www.peoplesway.com/johndoe. John Doe will advertise his site and will receive a
commission for each sale ordered on his site. John Doe's only responsibility is
to advertise his site. Inventory, shipping, merchant accounts, payments and
customer service will be handled by Peoplesway its subsidiaries and affiliates.
It is envisioned that thousands of site owners will individually advertise to
thousands of Internet shoppers to come and shop at their site. As of March 31,
2000 after six months of operations, there are nearly 605 sub Web sites.
Risk Factors.
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Limited Operating History.
We have had limited operations since our inception in 1980, and since
becoming Peoplesway in September 1999. We posted a net loss of $166,513 our
first period of operations as Peoplesway (September 1, 1999 through March 31,
2000), none of our operations have proved successful, and there is no assurance
that we can profitably market our present products and services.
Operating Results.
We had limited revenues ($408,395) and substantial losses ($166,513) for
the first partial-year of September 1, 1999 (date of reorganization) through
March 31, 2000.
The net loss shown for the period ending March 31, 2000 reflects certain
expenses, which were borne by RMC Group, Inc., which shares office space with
Peoplesway. All expenses paid by DRM and/or any of its subsidiaries are being
booked as a Peoplesway expense and an inter-company payable is established with
DRM and/or the appropriate subsidiary.
Additional Capital Requirements.
Peoplesway has limited capital. Our primary revenues are derived from the
sale of a limited number of goods and services online to limited markets, and
these sales are presently dependent upon the services provided by our alliance
with DRM and a small number of employees. If this alliance ends, it is likely
that we cannot continue as a going concern. We have limited capital to increase
our sales force or to expand operations; accordingly, without additional
capital, growth will be limited.
Economic Considerations.
Any substantial downturn in economic conditions could significantly depress
discretionary consumer spending and have a material adverse effect on
Peoplesway's business operations. At any given time, because of the search and
comparison-shopping capabilities using the Internet, it is possible to locate
items similar to that sold by Peoplesway at competitive or lower prices.
Inflation may also affect the future availability of favorable terms or
financing rates for Peoplesway or its customers, and deflation may also affect
revenues derived from these operations.
Reliance on Existing Management.
Peoplesway's operations are primarily dependent upon the experience and
expertise of Donald R. "Pete" Monroe, Chairman; Matthew MMonroe, President;
Eugene M. Johnston, CEO and Secretary/Treasurer; and Julie B. Jordan, Executive
Producer. The loss of any of our management may have a material adverse effect
on our present and contemplated business operations. Our success is also
dependant upon our ability to attract and retain qualified management,
administrative and sales personnel to support our anticipated future growth, of
which there can be no assurance. Peoplesway does not carry key man insurance
upon the lives of any of our directors or executive officers.
Reliance on Existing Alliance
Peoplesway's operations are primarily dependent upon the existence of the
alliance with DRM and its subsidiaries, and the contracts that exist between DRM
and vendors. Formal written agreements have been established with DRM and their
subsidiaries such that all goods and service, which DRM or its subsidiaries
offer for sale, are listed on, and for sale through, the Peoplesway website.
However, the loss of this alliance or a downturn in the business of DRM would
have a material adverse effect on our present and contemplated business
operations.
Lack of Dividends.
We have not paid and do not expect to pay any cash dividends with respect
to our common stock in the foreseeable future. We presently have limited
revenues and capital. Without substantial increases in revenues and capital, it
would be impossible to pay cash dividends.
Limited Market for Common Stock.
There is currently a limited trading market for our shares of common stock,
and there can be no assurance that a more substantial market will ever develop
or be maintained. Any market price for shares of common stock of Peoplesway is
likely to be very volatile, and numerous factors beyond our control may have a
significant adverse effect. In addition, the stock markets generally have
experienced, and continue to experience, extreme price and volume fluctuations
which have affected the market price of many small capital companies and which
have often been unrelated to the operating performance of these companies. These
broad market fluctuations, as well as general economic and political conditions,
may also adversely affect the market price of our common stock. Further, there
is no correlation between the present limited market price of Peoplesway's
common stock and our revenues, book value, assets or other established criteria
of value. The present limited quotations of our common stock should not be
considered indicative of the actual value of Peoplesway or our common stock.
Shares Eligible for Future Sales.
Sales of unrestricted securities may also have an adverse effect on any
market that may develop in Peoplesway's common stock. Of the 15,607,969
outstanding shares of Peoplesway's common stock, 107,328 have satisfied the
two-year "holding period" requirements of Rule 144(k), meaning that they can
presently be sold. In addition, of the 15,607,969 shares, 12,500,000 were
issued on October 18, 1999, and under Rule 144 of the Securities Act of 1933, if
certain conditions are satisfied, a limited number of these shares, up to 1% of
the total issued and outstanding shares approximately 156,000 of these shares up
to 1% of the issued and outstanding shares of the Company, could be sold during
any three month period. Once these shares enter the market, their sale may have
a depressive effect on the market price of our stock.
Conflicts of Interest.
Peoplesway's directors and officers are directors, executive officers,
controlling stockholders and/or partners of DRM and its related subsidiaries.
Thus, there exist potential conflicts of interest including, among other things,
time, effort and corporate opportunity, involved in participation with other
potential business opportunities.
Risks Associated with Execution of Growth Strategy.
A principal component of Peoplesway's growth strategy is to partner with
additional merchants and service providers that will allow their goods and
services to be sold through Peoplesway's Web site, and to attract additional
customers. Peoplesway's ability to execute its growth strategy depends on a
number of factors including, (i) Peoplesway's ability to acquire these goods and
services and related opportunities on economically feasible terms; (ii) our
ability to obtain the capital necessary to finance the expansion and to pay any
necessary sales, marketing and operational expenditures; and (iii) our
ability to manage potentially rapidly growing operations effectively and in a
manner which will result in significant customer satisfaction. There can be no
assurance that we will be successful in any of these respects.
Internet and Information Systems
We rely upon the accuracy and proper utilization of our Internet and
information system to provide timely distribution services, manage our sales and
track our customers' purchase and sale information. To manage our growth, we are
continually evaluating the adequacy of our existing systems and procedures
(including Year 2000 issues) and continue to update and integrate critical
functions. We anticipate that we will regularly need to make capital
expenditures to upgrade and modify our Internet and information systems,
including software and hardware, as we grow and the needs of our business
changes. There can be no assurance that we will anticipate all of the demands
which our expanding operations will place on our information system. The
occurrence of a significant system failure or our failure to expand or
successfully implement its systems could have a material adverse effect on our
operations and financial results.
Dependence On Technical Employees
The success of our Internet services business depends in large part upon
our ability to attract and retain highly skilled technical employees in
competitive labor markets. There can be no assurance that we will be able to
attract and retain sufficient numbers of skilled technical employees. The loss
of existing technical personnel or difficulty in hiring or retaining technical
personnel in the future could have a material adverse effect on our operations
and financial results.
Delivery Time
Peoplesway does not have a significant backlog of business since our
vendors normally deliver and/or install products and services purchased by our
customers within one to seven days from the date of order. Accordingly, backlog
is not material to our business or indicative of future sales. From time to
time, we may experience difficulty in obtaining products from our major vendors
as a result of general industry conditions. In addition, in the Internet
industry, one to three day delivery options are becoming commonplace. If we are
unable to deliver products to our customers within a short time period, we may
experience loss of sales.
Rapid Technological Change
As with all Internet companies, our success will depend in part on our
ability to develop Internet solutions that keep pace with continuing changes in
information technology, evolving industry standards and changing client
preferences. There can be no assurance that we will be successful in adequately
addressing these developments on a timely basis or that, if these developments
are addressed, we will be successful in the marketplace. In addition, there can
be no assurance that products or technologies developed by others will not
render our services noncompetitive or obsolete. Our failure to address these
developments could have a material adverse effect on our operating results and
financial condition.
Competition; Low Barriers to Entry.
Peoplesway expects competition to persist, intensify and increase in the
retail Internet industry in the future. There are thousands of individuals and
companies that sell goods and services similar to those offered by Peoplesway.
Almost all of our current and potential competitors have longer operating
histories, larger installed customer bases, longer relationships with clients
and vendors, and significantly greater financial, technical, marketing and
public relation resources than Peoplesway. As a strategic response to changes
in the competitive environment, Peoplesway may from time to time make certain
pricing, service technology or marketing decisions or business or technology
acquisitions that could have a material adverse effect on our business,
financial condition, results of operations and prospects, and similar actions by
competitors could materially adversely affect our present and proposed business
operations, results of operations, financial condition and prospects.
In addition, our ability to generate customers will depend to a significant
degree on the uniqueness and quality of our products and services and our
reputation among our customers and potential customers, compared with the
quality of similar services provided by, and the reputations of, Peoplesway's
competitors. To the extent that we lose customers to our competitors because of
dissatisfaction with our services, or our reputation is adversely affected for
any other reason, our business, results of operations, financial condition and
prospects could be materially adversely affected.
There are relatively low barriers to entry into Peoplesway's targeted
business. Anyone can attempt to purchase and sell the goods and services, which
Peoplesway purchases and markets. Accordingly, we are likely to face additional
competition from new entrants into the market in the future. There can be no
assurance that existing or future competitors will not develop or offer services
that provide significant performance, price, creative or other advantages over
those offered by Peoplesway, which could have a material adverse effect on our
business, financial condition, results of operations and prospects.
Acquisitions
We may consider acquiring the assets and operations of other companies in
order to expand our business. Integration of acquisitions may involve a number
of risks that could have a material adverse effect on our operating results and
financial condition, including: restructuring charges associated with the
acquisitions and other expenses associated with a change of control;
non-recurring acquisition costs such as accounting and legal fees; investment
banking fees; amortization of acquired intangible assets; recognition of
transaction-related obligations and various other acquisition-related costs;
diversion of management's attention; difficulties with retention, hiring and
training of key personnel; and risks of incurring unanticipated problems or
legal liabilities.
Although we would conduct due diligence, hire outside independent financial
and accounting consultants, and generally require representations, warranties
and indemnifications from the former owners of any acquisition candidates, there
can be no assurance that such owners will have accurately represented the
financial and operating conditions of their companies. If an acquired company's
financial or operating results were misrepresented, or the acquired company
otherwise failed to perform as anticipated, the acquisition could have a
material adverse effect on the operating results and financial condition of
Peoplesway.
Risks of "Penny Stock."
Peoplesway's common stock may be deemed to be "penny stock" as that term
is defined in Rule 3a51-1 of the Securities and Exchange Commission. Penny
stocks are stocks (i) with a price of less than $5.00 per share; (ii) that are
not traded on a "recognized" national exchange; (iii) whose prices are not
quoted on the NASDAQ automated quotation system (NASDAQ-listed stocks must
still meet requirement (i) above); or (iv) in issuers with net tangible assets
less than $2,000,000 (if the issuer has been in continuous operation for at
least three years) or $5,000,000 (if in continuous operation for less than three
years), or with average revenues of less than $6,000,000 for the last three
years. Until November 1999, there had been no "established public market" for
Peoplesway's common stock during the last five years. While our stock has
traded between $2.50 and $5.36 per share since November 1999, there is no
assurance that this price level will continue, as there has thus far been low
volume, and our stock may be deemed to be penny stock at any time. Section
15(g) of the Securities Exchange Act of 1934, as amended, and Rule 15g-2 of the
Securities and Exchange Commission require broker/dealers dealing in penny
stocks to provide potential investors with a document disclosing the risks of
penny stocks and to obtain a manually signed and dated written receipt of the
document before effecting any transaction in a penny stock for the investor's
account. Potential investors in our common stock are urged to obtain and read
such disclosure carefully before purchasing any shares that are deemed to be a
"penny stock."
Moreover, Rule 15g-9 of the Securities and Exchange Commission requires
broker/dealers in penny stocks to approve the account of any investor for
transactions in such stocks before selling any penny stocks to that investor.
This procedure requires the broker/dealer to (i) obtain from the investor
information concerning his or her financial situation, investment experience and
investment objectives; (ii) reasonably determine, based on that information,
that transactions in penny stocks are suitable for the investor and that the
investor has sufficient knowledge and experience as to be reasonably capable of
evaluating the risks of penny stock transactions; (iii) provide the investor
with a written statement setting forth the basis on which the broker/dealer made
the determination in (ii) above; and (iv) receive a signed and dated copy of
such statement from the investor, confirming that it accurately reflects the
investor's financial situation, investment experience and investment objectives.
Compliance with these requirements may make it more difficult for investors in
Peoplesway's common stock to resell their shares to third parties or to
otherwise dispose of them.
Year 2000.
Year 2000 Readiness Disclosure Statements
Historically, many computer programs have been written using two digits
rather than four to define the applicable year. This could lead, in many cases,
to a computer recognizing a date ending in "00" as 1900 rather than the year
2000. This phenomenon could result in major computer system failures or
miscalculations, and is generally referred to as the "Year 2000" problem.
During the period ended March 31, 2000, Peoplesway assessed its exposure to
the Year 2000 problem by analyzing its existing computer hardware and software
systems, as well as those used by DRM, Inc., RMC Group, Inc. and RMC Canada,
Ltd. In addition, it made inquiry to each of its vendors and its Internet
Service Provider ("ISP") to determine their readiness for the Year 2000, and we
believe that Peoplesway is Y2K Compliant. As of the date of this report, we
have not incurred any material costs or experienced material disruptions in our
business, related to the Year 2000 problem. We also have not experienced
material disruptions by our third parties, customers or suppliers will respect
to Year 2000 compliance.
Patents, Trademarks, Licenses, Franchisees, Concessions, Royalty Payments
or Vendor Contracts.
Peoplesway has applied for a federal trademark of "Peoplesway" and
"Peoplesway.Com." However, as of this date, these federal trademarks have not
been granted. We have secured the use of Peoplesway.Com on the Internet, which
cannot be used to access any other Web site as long as we remain current with
our Internet registration of the name. Agreements and licenses with our vendors
are directly between DRM and our vendors, other than Proflowers.com, with which
we have an oral agreement, cancelable upon notice by either party. We have no
direct control over the cancellation of these contracts, and if they are
canceled, it may hinder our ability to be profitable or to continue operations.
NASD OTC Bulletin Board Quotations.
Our common stock is currently quoted on the "Pink Sheets" of the National
Quotations Bureau, LLC ("NQB"). This may further impede the development of an
"established trading market" in our common stock, because the "Pink Sheets"
market is not as accepted by most brokers/dealers in securities as the OTC
Bulletin Board, and a broker/dealer must subscribe to the NQB's service. We
intend to, as soon as practicable following the satisfaction of all necessary
requirements of the NASD and SEC, file for quotations on the OTC Bulletin Board;
however, no assurance can be given that the NASD would allow the quotations of
our common stock to be reinstated.
Item 2. Properties
Peoplesway maintains offices at 2969 Interstate Street, Charlotte, North
Carolina. We share 1,900 square feet of office space and 2,600 square feet of
warehouse space with RMC Group, Inc., to whom we pay $1,850.00 per month as a
subtenant for one-third of the total space and utilities. The rent terms
approximate fair market value within the local area. There is no formal sublease
agreement between the parties, but the parties are presently negotiating such an
agreement RMC Group, Inc. allows us to use its office equipment, including
computers and related hardware. The primary system is an HP 9000 computer
network operating on a Unix system. Currently RMC Group, Inc. leases this
equipment. Peoplesway currently outsources the hosting of its Web sites with IMC
Worldwide, Inc. We believe that we currently have sufficient space and computer
systems to carry on our operations for the foreseeable future. If RMC Group,
Inc., were to terminate our sub-tenancy or use of office equipment and computer
system, there is no assurance that we can continue as a going concern.
Item 3. Legal Proceedings
The Company is not a party to any legal proceedings, nor, to the best of
its knowledge, are any such proceedings threatened or contemplated.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted to a vote during the year.
PART II
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Item 5. Market for the Registrant's Common Stock and Related Security Holder
Matters
(a) Our common stock is currently quoted on the "Pink Sheets" of the National
Quotations Bureau, LLC ("NQB"). This may further impede the development of an
"established trading market" in our common stock, because the "Pink Sheets"
market is not as accepted by most brokers/dealers in securities as the OTC
Bulletin Board, and a broker/dealer must subscribe to the NQB's service. We
intend to, as soon as practicable following the satisfaction of all necessary
requirements of the NASD and SEC, file for quotations on the OTC Bulletin Board;
however, no assurance can be given that the NASD would allow the quotations of
our common stock to be reinstated.
The following quotations were provided by the National Quotation Bureau,
and do not represent actual transactions; these quotations do not reflect dealer
markups, markdowns or commissions.
STOCK QUOTATIONS*
CLOSING BID
Period: High Low
1/1/98 to 12/31/98 $0.0 $0.0
1/1/99 to 3/31/99 $0.10 $0.10
4/1/99 to 6/30/99 $0.10 $0.10
7/1/99 to 9/30/99 $0.10 $0.10
10/1/99 to 12/30/99 $5.38 $0.10
1/1/00 to 3/31/00 $5.36 $2.50
* Peoplesway's common stock had not traded before the first calendar quarter
of 1999 for over ten years.
(b) Holders.
The number of record holders of Peoplesway's securities as of the date of
this report is approximately 277.
(c) Dividends.
Peoplesway has not declared any cash dividends with respect to its common
stock, and does not intend to declare dividends in the foreseeable future. The
future dividend policy of Peoplesway cannot be ascertained with any certainty.
There are no material restrictions limiting, or that are likely to limit, our
ability to pay dividends on our securities.
Item 6. Management's Discussion and Analysis
Selected Financial Data
-------------------------
For the Period from September 1, 1999 (date of reorganization) through March 31,
2000.
Retail Sales $408,395
Net Loss (166,513)
Net Loss per Common Share (.017)
Weighted Average Common
Shares Outstanding 9,724,401
At March 31, 2000
Total Assets $102,366
Working Capital Deficit (149,906)
Shareholders' Deficit (149,906)
No dividends have been declared or paid during the period presented.
Results of Operations
-----------------------
For the Period from September 1, 1999 (date of reorganization) through March 31,
2000.
Sales
Net revenues for the period ended March 31, 2000 were $316,040 on retail sales
of $408,395, which consisted of product sales, monthly service fees and business
aid sales. We plan to accelerate growth of sales in fiscal 2001 by increasing
expenditures on marketing and growing public awareness of services.
Income / Loss
Net loss for the period ended March 31, 2000 was $166,513 primarily attributable
to subcontract labor associated with launching retail operations and rent for
our facilities. Additional professional fees were incurred pertaining to legal
and accounting expenses associated with the filing of the Company's Form 10-SB
registration statement and general corporate purposes.
The Company expects to continue to incur losses at least through fiscal 2002 and
there can be no assurance that the Company will achieve or maintain
profitability or that its revenue growth can be sustained in the future.
Expenses
Selling, general and administrative expenses for the period were $267,720.
Notable expense accounts include subcontract labor, rent, and telephone, which
were $80,378, $46,605, and $24,438, respectively. We anticipate incurring
approximately the same amount of these expenses during fiscal 2001.
We expect increases in certain expenses such as advertising through fiscal
2001 as the Company moves toward increasing development and marketing of our
products.
Cost of Sales
One of the largest factors in the variations in the cost of sales as a
percentage of net sales is the cost of products.
Cost of sales for the period ended March 31, 2000 was $214,833. Gross margins
and product prices remained relatively constant during the year.
Retail sales and net revenue for the period do not include sales of a
cooperative advertising campaign (Peoplesway Giveaway Certificates) that was
offered to new web site owners. Approximately $196,850 in net revenues from
these sales is included on the balance sheet as deferred revenue, based on SEC
revenue recognition policies on these types of sales. As the certificates are
redeemed with an order by customers or expire, the sales will be included in
revenues for that period. There are certain commission expenses on these sales
that will also be reflected on the balance sheet, as prepaid expenses. For the
period ended March 31, 2000, the prepaid expense amount totaled $101,730. This
expense will be recorded on the income statement in the period that the
certificates are redeemed or expire. Since this was a new product announcement,
a large number of the then current web site owners placed orders for the
Peoplesway Giveaway Certificates and therefore these sales for the period were a
much larger percentage than we expect in the future. Had all the income and
expense of these sales been included in income for the period, our loss would
have been approximately $(71,393).
Impact of Inflation
We believe that inflation has had a negligible effect on operations during the
period. We believe that we can offset inflationary increases in the cost of
sales by increasing sales and improving operating efficiencies.
Trends, Events, and Uncertainties
Demand for the Company's products will be dependent on, among other things,
market acceptance of the Company's concept, the quality of its Web site and
general economic conditions, which are cyclical in nature. Inasmuch as a major
portion of the Company's activities is the receipt of revenues from the sales of
its products, the Company's business operations may be adversely affected by the
Company's competitors and prolonged recessionary periods.
Liquidity and Capital Resources
----------------------------------
For the Period from September 1, 1999 (date of reorganization) through
March 31, 2000.
Cash flows used in operations were a negative $36,653 for the period ended March
31, 2000. Negative cash flows from operating activities were primarily
attributable to the net loss from operations and prepayment of certain expenses.
Cash flows generated from financing activities were $37,289 for the period ended
March 31, 2000 primarily attributable to proceeds from related parties.
We have funded our cash needs from inception through March 31, 2000 with a
series of related party and equity transactions.
We will substantially rely on the existence of revenue from the product sales
and from the projected revenues of www.Peoplesway.com. We project that we will
need additional capital to fund operations over the next 12 months. If the
projected revenues of www.Peoplesway.com fall short of needed capital, the
Company will not be able to sustain its capital needs for more than six months.
We will then need to obtain additional capital through equity or debt financing
to sustain operations for an additional year. A lack of significant revenues
beginning in the first six months of 2001 will significantly affect the cash
position of the Company and move the us toward a position where the raising of
additional funds through equity or debt financing will be necessary.
On a long-term basis, liquidity is dependent on continuation and expansion of
operations, receipt of revenues, additional infusions of capital and debt
financing. We are considering launching a wide scale marketing and advertising
campaign. Our current available capital and revenues are not sufficient to fund
such a campaign. If we choose to launch such a campaign it well require
substantially more capital. If necessary, we plan to raise this capital through
an additional follow-on stock offering. The funds raised from this offering
will be used to develop and execute the marketing and advertising strategy,
which may include the use of television, radio, print and Internet advertising.
However, there can be no assurance that we will be able to obtain additional
equity or debt financing in the future, if at all. If we are unable to raise
additional capital, our growth potential will be adversely affected.
Additionally, we will have to significantly modify our plans.
Item 7. Financial Statements
--------
AUDITED FINANCIAL STATEMENTS
Peoplesway.com, Inc.
March 31, 2000
--------
<PAGE>
CONTENTS
===============================================================
INDEPENDENT AUDITORS' REPORT 1
BALANCE SHEET
ASSETS, LIABILITIES AND STOCKHOLDERS' DEFICIT 2
STATEMENT OF OPERATIONS 3-4
STATEMENT OF STOCKHOLDERS'
DEFICIT 5
STATEMENT OF CASH FLOWS 6
NOTES TO FINANCIAL
STATEMENTS 7-13
===============================================================
Michael J. Bongiovanni, P.A., C.P.A.
19425-G LIVERPOOL PARKWAY
CORNELIUS, NORTH CAROLINA 28031
BUSINESS (704) 892-8733
FACSIMILE (704) 948-6677
May 9, 2000
-----------------------
To the Board of Directors
Peoplesway.com, Inc.
2969 Interstate Street
Charlotte, N.C. 28208
We have audited the accompanying balance sheet of Peoplesway.com, Inc. (FKA
Prospector Energy, Inc.) as of March 31, 2000 and the related statements of
operations, stockholders' deficit, and cash flows for the period from September
1, 1999 (date of reorganization) through March 31, 2000. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free from material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Peoplesway.com, Inc. as of
March 31, 2000, and the results of its operations and its cash flows for the
period from September 1, 1999 (date of reorganization) through March 31, 2000 in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note C to the
financial statements, the Company has suffered recurring losses from operations,
its current liabilities exceeds its current assets and its cash flows from
operating activities are negative. This raises substantial doubt about the
Company's ability to continue as a going concern. Management's plans in regard
to these matters are also described in Note C. The accompanying financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
Michael J. Bongiovanni, C.P.A.
Charlotte, North Carolina
BALANCE SHEET
PEOPLESWAY.COM, INC.
March 31, 2000
<TABLE>
<CAPTION>
ASSETS
------
<S> <C>
CURRENT ASSETS
-----------------------------------------------
Cash and Cash Equivalents . . . . . . . . . . . $ 636
Prepaid Expenses - Note I . . . . . . . . . . 101,730
----------
TOTAL CURRENT ASSETS. . . . . . . . . . . . 102,366
----------
TOTAL ASSETS. . . . . . . . . . . . . . . . . . $ 102,366
==========
LIABILITIES AND STOCKHOLDERS' DEFICIT
-----------------------------------------------
CURRENT LIABILITIES
-----------------------------------------------
Accounts Payable - Trade. . . . . . . . . . . $ 11,974
Accrued Expenses. . . . . . . . . . . . . . . 1,538
Outstanding Checks in Excess of Bank Balance. 5,621
Shareholder Loans Payable - Note F. . . . . . 7,000
Deferred Revenue - Note I . . . . . . . . . . 196,850
Due to Related Parties, Net - Note G. . . . . 29,289
----------
TOTAL CURRENT LIABILITIES . . . . . . . . . 252,272
----------
LONG-TERM DEBT
-----------------------------------------------
STOCKHOLDERS' DEFICIT
-----------------------------------------------
Common Stock ($.001 par value, 100,000,000
shares authorized; 15,607,969 issued
and outstanding at March 31, 2000). . . . . . . 15,607
Additional Paid in Capital. . . . . . . . . . 1,000
Retained Deficit. . . . . . . . . . . . . . . (166,513)
----------
TOTAL STOCKHOLDERS' DEFICIT . . . . . . . (149,906)
----------
TOTAL LIABILITIES AND
STOCKHOLDERS' DEFICIT . . . . . . . . . . . $ 102,366
==========
</TABLE>
See notes to audited financial statements and auditors' report.
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
PEOPLESWAY.COM, INC.
For the Period from September 1, 1999 (date of reorganization) through March 31,
================================================================================
2000
====
<S> <C>
REVENUE AND RELATED COSTS (Note G)
-----------------------------------------------
Retail Sales. . . . . . . . . . . . . . . . . $ 408,395
Distributors Allowances on Product Purchases. (122,519)
----------
285,876
Other Revenue . . . . . . . . . . . . . . . . 30,164
----------
Net Revenue . . . . . . . . . . . . . . . . . 316,040
Cost of Sales . . . . . . . . . . . . . . . . (214,833)
GROSS PROFIT. . . . . . . . . . . . . . . . . 101,207
OPERATING EXPENSES (Note G)
-----------------------------------------------
Professional Fees . . . . . . . . . . . . . . $ 20,874
Salaries. . . . . . . . . . . . . . . . . . . 16,923
Subcontract Labor . . . . . . . . . . . . . . 80,378
Insurance . . . . . . . . . . . . . . . . . . 23,804
Travel and Entertainment. . . . . . . . . . . 10,787
Printing. . . . . . . . . . . . . . . . . . . 3,695
Rent. . . . . . . . . . . . . . . . . . . . . 46,605
Telephone . . . . . . . . . . . . . . . . . . 24,438
Utilities . . . . . . . . . . . . . . . . . . 5,950
Repairs and Maintenance . . . . . . . . . . . 2,597
Postage . . . . . . . . . . . . . . . . . . . 3,983
Supplies. . . . . . . . . . . . . . . . . . . 3,051
Advertising . . . . . . . . . . . . . . . . . 1,138
Office Expense. . . . . . . . . . . . . . . . 2,976
Credit Card Processing Fees . . . . . . . . . 6,525
Licenses and Fees . . . . . . . . . . . . . . 5,245
Management Fees . . . . . . . . . . . . . . . 7,877
Other . . . . . . . . . . . . . . . . . . . . 874
----------
TOTAL EXPENSES. . . . . . . . . . . . . . . . 267,720
----------
NET LOSS. . . . . . . . . . . . . . . . . . $(166,513)
==========
</TABLE>
See notes to audited financial statements and auditors' report.
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS (CONT.)
PEOPLESWAY.COM, INC.
For the Period from September 1, 1999 (date of reorganization) through March 31,
================================================================================
2000
====
<S> <C>
NET LOSS PER COMMON SHARE
BASIC & FULLY DILUTED . $ (.017)
=================
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING. . . 9,724,401
=================
</TABLE>
See notes to audited financial statements and auditors' report.
<TABLE>
<CAPTION>
STATEMENT OF STOCKHOLDERS' EQUITY
PEOPLESWAY.COM, INC.
For the Period from September 1, 1999 (date of reorganization) through March 31, 2000
=====================================================================================
Common Common Additional
Shares Stock Paid-in Retained
(000's) $ Capital Deficit
------------------------------------ ------- -------- ----------- ----------
<S> <C> <C> <C> <C>
Balances, September 1, 1999. . . . . 0 $ -0- $ -0- $ -0-
Retroactive restatement
(recapitalization) of equity due
to reverse acquisition of public
shell and related 1 for 400 reverse
stock split. . . . . . . . . . . . . 15,607 15,607 0 0
Initial Capital Contribution . . . . 0 0 1,000 0
Net loss for period. . . . . . . . . 0 0 0 $(166,513)
------- -------- -------- ----------
Balances, March 31, 2000 . . . . . . 15,607 $ 15,607 1,000 $(166,513)
======= ======== ========== ==========
</TABLE>
See notes to audited financial statements and auditors' report.
<TABLE>
<CAPTION>
STATEMENT OF CASH FLOWS
PEOPLESWAY.COM, INC.
For the Period from September 1, 1999 (date of reorganization) through March 31,
================================================================================
2000
====
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
------------------------------------------------
Net Loss . . . . . . . . . . . . . . . . . . . $(166,513)
Adjustments to reconcile net loss
to net cash used in operating activities:
Retroactive re-capitalization of equity due to
reverse acquisition of public shell . . . . . 15,607
Increase in:
Prepaid expenses - Note I . . . . . . . . . . (101,730)
Accounts payable - trade. . . . . . . . . . 11,974
Accrued expenses. . . . . . . . . . . . . . 1,538
Deferred revenue - Note I . . . . . . . . . 196,850
Outstanding checks in excess of bank
Balance. . . . . . . . . . . . . . . . . . . . . 5,621
NET CASH USED IN
OPERATING ACTIVITIES . . . . . . . . . . . . (36,653)
----------
CASH FLOWS FROM FINANCING ACTIVITIES:
------------------------------------------------
Shareholder loans received - Note F. . . . . . $ 7,000
Net proceeds from related parties - Note G . . 29,289
Proceeds from initial capital contribution . . 1,000
----------
NET CASH PROVIDED BY
FINANCING ACTIVITIES . . . . . . . . . . . . 37,289
----------
NET INCREASE IN CASH
AND CASH EQUIVALENTS . . . . . . . . . . . . $ 636
----------
Cash and cash equivalents, beginning of period . $ -
----------
CASH AND CASH EQUIVALENTS,
END OF PERIOD. . . . . . . . . . . . . . . . $ 636
==========
</TABLE>
See notes to audited financial statements and auditors' report.
NOTES TO FINANCIAL STATEMENTS
PEOPLESWAY.COM, INC.
For the Period from September 1, 1999 (date of reorganization) through March 31,
================================================================================
2000
====
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
----------------------------------------------------------
Business Activity - Peoplesway.com, Inc. (the Company) was organized under the
------------------
laws of the State of North Carolina on August 25, 1999. On September 1, 1999,
Peoplesway.com, Inc. legally amended its Articles of Incorporation to effect a
name change from Prospector Energy, Inc. and commenced operations as of that
date upon a reverse acquisition. On September 1, 1999, the Company acquired 100%
of the outstanding common stock of Prospector Energy, Inc. The acquisition
resulted in a tax-free exchange for federal and state income tax purposes. The
transaction was accounted for as a reverse merger in accordance with Accounting
Principles Board Opinion No. 16 wherein the shareholders of Peoplesway.com, Inc.
retained the majority of the outstanding common stock of the Company after the
merger. Peoplesway.com, Inc. had no prior operating history for several years
while functioning under its former name of Prospector Energy, Inc.
The Company provides E-commerce Internet web sites for sale of its products to
customers across the world. The majority of customers are in the United States
of America and Canada.
Inherent in the Company's Internet related business are various risks and
uncertainties, including its limited operating history, recent development of
the Internet market and unproved acceptance and effectiveness of Web E-commerce,
unproven business model, risks associated with technological change, and the
limited history of commerce on the Internet. The Company's success may depend in
part upon the emergence of the Internet as a communications medium, prospective
product development efforts, and the acceptance of the Company's products by the
marketplace.
Basis of Presentation - The financial statements included herein include the
-----------------------
accounts of the Peoplesway.com, Inc. prepared under the accrual basis of
accounting.
Cash and Cash Equivalents - For purposes of the Statement of Cash Flows, the
----------------------------
Company considers liquid investments with an original maturity of three months
or less to be cash equivalents.
Management's Use of Estimates - The preparation of financial statements in
--------------------------------
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that effect the reported amounts of assets and
liabilities, disclosures of contingent assets and liabilities at the date of
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
NOTES TO FINANCIAL STATEMENTS
PEOPLESWAY.COM, INC.
For the Period from September 1, 1999 (date of reorganization) through March 31,
================================================================================
2000
====
Revenue Recognition- Revenue is recognized when the products are shipped.
--------------------
Internet related service revenue is recorded when earned which is upon
completion of web site set-up or appropriate service has been provided. All
revenue transactions are reviewed for credit worthiness prior to commencement of
the revenue process.
Web Site Research and Development - All costs incurred during the application
------------------------------------
development stage of web site research and development are capitalized. All
training and application maintenance costs incurred during the post
implementation (operation stage) are expensed. .All upgrades and enhancements
incurred during the post implementation (operations stage) are capitalized.
Comprehensive Income (Loss) - The Company adopted Financial Accounting Standards
---------------------------
Board Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income", which establishes standards for the reporting and display
of comprehensive income and its components in the financial statements. There
were no items of comprehensive income (loss) applicable to the Company during
the period covered in the financial statements.
Advertising Costs - Advertising costs are expensed as incurred. The Company does
-----------------
not incur any direct-response advertising costs. Advertising expense totaled
$1,138 for the period from September 1, 1999 (date of reorganization) through
March 31, 2000.
Capitalized Software Costs - Software development costs are required to be
----------------------------
capitalized when a product's technological feasibility has been established by
completion of a working model of the product and ending when a product is
available for general release to customers. To date, completion of a working
model of its products and general release have substantially coincided. As a
result, the Company has not capitalized any software development costs since
such costs have not been significant.
Net Loss per Common Share - Net loss per common share has been calculated by
-----------------------------
divided the net loss for the period presented by the weighted average number of
common shares.
Income Taxes - Income taxes are provided in accordance with Statement of
-------------
Financial Accounting Standards No. 109 (SFAS No. 109), "Accounting for Income
Taxes." A deferred tax asset or liability is recorded for all temporary
differences between financial and tax reporting and net operating
loss-carryforwards.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that, some portion or all of the deferred
tax asset will not be realized. Deferred tax assets and liabilities are adjusted
for the effect of changes in tax laws and rates on the date of enactment.
NOTES TO FINANCIAL STATEMENTS
PEOPLESWAY.COM, INC.
For the Period from September 1, 1999 (date of reorganization) through March 31,
================================================================================
2000
====
NOTE B - RECENT ACCOUNTING PRONOUNCEMENTS
----------------------------------------------
In June of 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities, which the Company has adopted. The Statement, which is
effective for fiscal years beginning after June 15, 1999, establishes standards
for accounting and reporting for derivative instruments and hedging activities.
Statement of Financial Accounting Standards No.133 does not have an impact on
its financial statements because the Company does not currently hold any
derivative instruments.
In March, 1998, the American Institute of Certified Public Accountants (AICPA)
issued Statement of Position (SOP) No. 98-1 "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use", which establishes
guidelines for the accounting for the costs of all computer software developed
or obtained for internal use. The Company adopted this SOP but the adoption of
the SOP does not have a material impact on the Company's financial statements.
In April, 1998, the AICPA issued SOP 98-5, "Reporting on the Costs of Start-Up
Activities". The SOP is effective for fiscal years beginning after December 15,
1998. The SOP requires costs of start-up activities and organization costs to be
expensed as incurred. The Company has adopted SOP 98-5, however, the adoption of
SOP 98-5 does not have a material impact on the Company's financial statements.
The FASB has issued SFAS No. 134, "Accounting for Mortgage-Backed Securities
Retained after the Securitization of Mortgage Loans Held for Sale by a Mortgage
Banking Enterprise," an amendment of FASB Statement No. 65, which the Company
has not been required to adopt as of March 31, 2000. Statement No. 65, as
amended by FASB Statements No. 115, "Accounting for Certain Investments in Debt
and Equity Securities", and No. 125, "Accounting for Transfer and Servicing of
Financial Assets and Extinguishments of Liabilities", require that after the
securitization of a mortgage loan held for sale, an entity engaged in mortgage
banking activities classify the resulting mortgage-backed security as a trading
security. This statement further amends Statement No. 65 to require that after
the securitization of mortgage banking activities classify the resulting
mortgage-backed securities or other retained interests based on its ability and
intent to sell or hold those investments. This Statement is effective for fiscal
years after December 15, 1998 and does not have a material impact on the
Company.
NOTES TO FINANCIAL STATEMENTS
PEOPLESWAY.COM, INC.
For the Period from September 1, 1999 (date of reorganization) through March 31,
================================================================================
2000
====
NOTE C - GOING CONCERN
--------------------------
As shown in the accompanying financial statements, the Company has suffered
recurring losses from operations to date, its current liabilities exceed its
current assets and its cash flows from operating activities are negative. This
raises substantial doubt as to the Company's ability to continue as a going
concern. The ability of the Company to continue as a going concern is dependent
on generating additional sales and obtaining capital. Management has enacted a
plan of obtaining capital that may add value to the Company and its
stockholders.
NOTE D - SUPPLEMENTAL CASH FLOW INFORMATION
-------------------------------------------------
Supplemental disclosures of cash flow information for the period from September
1, 1999 (date of reorganization) through March 31, 2000 are summarized as
follows:
Cash paid during the period for interest and income taxes:
Income Taxes $ -
Interest $ 25
NOTE E - INCOME TAXES
-------------------------
Due to the operating loss and the inability to recognize an income tax benefit
therefrom, there is no provision for current or deferred federal or state income
taxes for the period from September 1, 1999 (date of reorganization) through
March 31, 2000.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amount used for federal and state income tax purposes.
The Company's total deferred tax asset, calculated using federal and state
effective tax rates, as of March 31, 2000 is as follows:
Net operating loss carryforwards $ 42,000
Valuation allowance (42,000)
----------
Net deferred tax asset $ --
=======
NOTES TO FINANCIAL STATEMENTS
PEOPLESWAY.COM, INC.
For the Period from September 1, 1999 (date of reorganization) through March 31,
================================================================================
2000
====
NOTE E - INCOME TAXES (CONT.)
----------------------------------
Because of the Company's lack of earnings history, the deferred tax asset has
been fully offset by a valuation allowance. The valuation allowance increased by
approximately $42,000 for the period from September 1, 1999 (date of
reorganization) through March 31, 2000.
As of March 31, 2000, the Company had federal and state net operating loss
carryforwards in the amount of $167,000, which expire in the year 2015.
NOTE F - SHAREHOLDER LOANS PAYABLE
---------------------------------------
During the period from September 1, 1999 (date of reorganization) through March
31, 2000, the Company borrowed $7,000 in working capital debt financing from one
of the Company's officers. The entire balance is payable on demand with interest
at a rate of 8% per annum.
NOTE G - RELATED PARTY TRANSACTIONS AND CONCENTRATIONS OF RISK
-----------------------------------------------------------------------
The Company has contracted with a company related through common ownership
whereby the related party holding company and its subsidiaries utilize the
Company as its exclusive Internet sales and marketing agent. The Company markets
the related parties' product lines and maintains the web sites of site owners
within their network of customers. In exchange, the related parties provide
warehouse space, office space, customer service, warehouse and management
personnel, supplies and other items necessary to provide this service. In
accordance with the agreement, the product cost is invoiced to the Company at
cost plus 10%. In addition, the aforementioned non-product related expenses are
invoiced to the Company based on the percentage of Internet sales to the related
parties' total sales. The above relationships present a concentration of risk in
that a substantial volume of business is transacted with the related parties'
customer base and use of its source of labor. This makes the Company potentially
vulnerable to the risk of a near-term severe impact.
The composition of "Due to Related Parties, net" in the accompanying Balance
Sheet at March 31, 2000 is as follows:
Due from related party holding company $ 16,500
Due from related party holding company's subsidiary (#1) 16,803
Due to related party holding company's subsidiary (#2) (46,592)
Due to party related through common directorship (16,000)
--------
$ (29,289)
===========
NOTES TO FINANCIAL STATEMENTS
PEOPLESWAY.COM, INC.
For the Period from September 1, 1999 (date of reorganization) through March 31,
================================================================================
2000
====
NOTE G - RELATED PARTY TRANSACTIONS AND CONCENTRATIONS
-------------------------------------------------------------
OF RISK (CONT.)
-----------------
Included in the accompanying Statement of Operations are the following
transactions (sales and expenditures) with the related parties for the period
from September 1, 1999 (date of reorganization) through March 31, 2000:
Sales Expenditures
------------ ------------
Related party holding company $ 21,500 $ 5,000
Related party holding company's subsidiary (#1) 107,004 90,201
Related party holding company's subsidiary (#2) 245,192 291,784
NOTE H - EARNINGS (LOSS) PER SHARE (EPS)
-----------------------------------------------
Statement of Financial Accounting Standard (SFAS) No.128 requires dual
presentation of basic and diluted EPS with a reconciliation of the numerator and
denominator of the EPS computations. Basic earnings per share amounts are based
on the weighted average shares of common stock outstanding. If applicable,
diluted earnings per share would assume the conversion, exercise or issuance of
all potential common stock instruments such as options, warrants and convertible
securities, unless the effect is to reduce a loss or increase earnings per
share. Accordingly, this presentation has been adopted for the period presented.
There were no adjustments required to net loss for the period presented in the
computation of diluted earnings per share. The basic and diluted weighted
average shares outstanding for the period from September 1, 1999 (date of
reorganization) through March 31, 2000 is as follows:
Weighted average outstanding common shares used
for basic and diluted EPS 9,724,401
=======
NOTES TO FINANCIAL STATEMENTS
PEOPLESWAY.COM, INC.
For the Period from September 1, 1999 (date of reorganization) through March 31,
================================================================================
2000
====
NOTE I - DEFERRED REVENUE AND RELATED PREPAID EXPENSES
--------------------------------------------------------------
Included in the accompanying Balance Sheet is deferred revenue of $196,580 and
related prepaid expenses of $101,730 at March 31, 2000. The deferred revenue
amount represents certain revenue that did not fully meet the Company's revenue
recognition policies at March 31, 2000 in accordance with recently issued
Securities and Exchange Commission Staff Accounting Bulletins and Financial
Accounting Standards Board Emerging Issues Task Force pronouncements. In
addition, the prepaid expenses represent commissions paid directly relating to
the deferred revenue. Both amounts are presented as "current" in the Balance
Sheet because revenue is expected to be earned and expenses are expected to be
incurred in the upcoming operating cycle in management's estimation. Revenue and
related expense will be recorded ratably as certificates are redeemed and orders
are placed or as the certificates expire, whichever occurs first.
Item 8. Changes with and Disagreements With Accountants on Accounting and
Financial Disclosure
NONE
Item 9. Directors and Executive Officers of the Registrant
Identification of Directors and Executive Officers and Significant Employees.
The following table identifies all current executive officers, directors
and significant employees of Peoplesway. The officers and directors will serve
until the next annual meeting of the stockholders or until their successors are
elected or appointed and qualified, or they resign or are terminated.
<TABLE>
<CAPTION>
Name Age Position Date Position Commenced
-------------------------------- --- -------------------- -----------------------
<S> <C> <C> <C>
Donald R. "Pete" Monroe. . . . . 55 Chairman 8/99
Matthew M. Monroe. . . . . . . . 30 President & Director 8/99
Eugene M. Johnston . . . . . . . 36 CEO, Secretary/ 8/99
Treasurer & Director
Julie B. Jordan. . . . . . . . . 40 Executive Producer 10/99
</TABLE>
None of our directors hold directorships in other reporting companies.
Business Experience and Personal Background.
Management and Key Personnel.
Donald R. "Pete" Monroe, Chairman
Education: BS, Mathematics, UNC of Pembroke, Magna Cum Laude
Present work positions: Chairman of the Board of Directors, Peoplesway.Com,
Inc., 1999 to present; Chairman of the Board of Directors, DRM, Inc., 1978 to
present;
Work history:
1966-1970 United States Department of Defense, Mathematician and System
Programmer for Naval Weapons Laboratory, Dahlgren, Virginia
1970-1972 Private Business, Independent Distributor, Direct Sales Industry,
Virginia & Alabama
1972-1973 GWT Enterprises, Vice President, Direct Sales Industry, Orlando,
Florida
1973-1978 Koscot, Inc., President, Direct Sales Industry, Orlando, Florida
1978-Today DRM, Inc. and subsidiaries: WeCare Distributors, Inc., RMC Group,
Inc.,RMC Group Canada, Ltd., KAM Marketing, LLC,
Owner/Chairman, direct Sales Industry, Charlotte, North Carolina
1999-Today Chairman, Peoplesway.Com, Inc., Direct Sales Industry, Charlotte,
North Carolina
Present responsibilities: As Chairman of DRM and Chairman of Peoplesway,
Mr. Monroe oversees marketing, product development, production, seeks business
opportunities, and strategic alliances with other companies and organizations.
He continuously directs and coordinates financial programs to provide funding
for new or continuing operations in order to maximize return on investments, and
increase productivity.
Mr. Monroe has two sons and one daughter and resides with his wife in
Charlotte, NC.
Matthew M. Monroe, President and Director
Education: BS, Journalism & American Studies, University of Southern
Mississippi
Present work positions: President, Peoplesway.Com, Inc., 1999 to present;
Vice President of Marketing, RMC Group, Inc., 1993 to present
Work history:
1993-Today RMC Group, Inc., Vice President, Direct Sales Industry,
Charlotte, North Carolina
1999-Today President/Director, Peoplesway.Com, Inc, Direct Sales Industry,
Charlotte, North Carolina
Present responsibilities: For both Peoplesway and RMC Group, Inc., Mr.
Monroe is responsible for new product development, monthly and quarterly
newsletter (circulating to as many as 5,000 readers), product catalogues,
brochures, company product announcements, customer specials, sales force
training, sales presentations, and event coordinating. Mr. Monroe trains top
level producers on sales force automation. Mr. Monroe worked with other
management team members on bringing RMC Group, Inc., closer to the sales force
home office. After two years of development and beta testing, the sales force
now uses a software program that dials directly into the mainframe database.
This allows the independent contractor access to customer ordering information
as well as complete data filters to run valuable reports for sales leadership
information. Mr. Monroe also developed the Peoplesway concept and business
model over the past three years.
Mr. Monroe has one son and resides with his wife in Cornelius, North
Carolina.
Eugene M. Johnston , CEO, Secretary/Treasurer and Director
Education: BA, Business Administration, University of North Carolina at
Charlotte
Work history:
1984-1992 WeCare Distributors, Inc., Vice President, Direct Sales Industry,
Charlotte, North Carolina
1993-Today RMC Group, Inc., Vice President, Direct Sales Industry,
Charlotte, North Carolina
1999-Today CEO, Secretary/Treasurer/Director, Peoplesway.Com, Inc., Direct
Sales Industry, Charlotte, North Carolina
Present responsibilities: Mr. Johnston is responsible for all day-to-day
operations of Peoplesway and RMC Group, Inc. In addition to his daily
administrative duties, Mr. Johnston works closely with Marketing and Sales. He
is involved in company training and motivation and travels throughout the US and
Canada helping to conduct training seminars. Mr. Johnston was also instrumental
in recently upgrading the company computer system to ensure it was Year 2000
compliant, including the web related software.
Mr. Johnston has two children and resides with his wife in Charlotte, North
Carolina.
Julie B. Jordan, Executive Producer
Education: BS, Industrial Engineering; Masters of Science Degree,
Educational Technology, Mississippi State University
Work history:
1985-1988 BESCO Office Products, IBM system specialist, installed and
maintained MS-DOS based computer systems and networks, Columbus,
Mississippi
1988-1996 Mississippi School for Mathematics and Science, Coordinator of
Technology and computer teacher, Columbus, Mississippi
1996-1997 The Internet Learning Company, Owner, provider of Internet
dial-up and digital Internet access, Columbus, Mississippi
1998-1999 Ayrix Technologies, Inc., Chief Executive Officer, Internet
solutions provider of Internet connection, Web design and
hosting, Columbus, Mississippi
Present responsibilities: Ms. Jordan is responsible for Peoplesway's Web
site development, content and connections to users and to the Web, and for
information technology issues for the Company. Ms. Jordan often speaks and
conducts seminars on the growth of the Internet, eCommerce and its impact on our
economy, our businesses, and society. Ms. Jordan adds valuable experience in the
high-tech Internet industry and leadership experience in managing rapidly
growing Internet businesses to the Peoplesway.Com executive team.
Ms. Jordan has three children and resides with her husband in Mississippi.
Family Relationships
The following table details the family relationships among our directors
and officers.
<TABLE>
<CAPTION>
<S> <C> <C>
Name. . . . . . . . . . . . . . . . . . Position Relationships
--------------------------------------- --------- ------------------
Donald R. "Pete" Monroe . . . . . . . . Chairman Father of Matthew M. Monroe; Uncle
of Eugene M. Johnston
Matthew M. Monroe . . . . . . . . . . . President Son of Donald R. "Pete" Monroe; &
Director Cousin of Eugene M. Johnston
Eugene M. Johnson . . . . . . . . . . . C.E.O. Nephew of Donald R. "Pete" Monroe;
Cousin of Matthew M. Monroe
</TABLE>
There are no arrangements or understandings pursuant to which any of them were
elected as officers.
There have been no events under any bankruptcy act, no criminal proceedings and
no judgments or injunctions material to the evaluation of the ability and
integrity of any director or executive officer during the past 5 years.
Item 10. Executive Compensation
None of our directors or officers have received any compensation from
Peoplesway, including salary, stock, stock options, or otherwise, and no
compensation is accruing. There are no arrangements or agreements for
employment, compensation, or change in control that exist with the Peoplesway
for either our officers or directors. Our officers and directors are presently
compensated by DRM and/or RMC Group, Inc., at the same levels at which they were
compensated prior to the formation of Peoplesway, and it is anticipated that
this arrangement will continue for the foreseeable future. Presently, our only
paid employee is Julie B. Jordan, Executive Producer, who receives a salary of
$40,000 per year. All other individuals who provide services for Peoplesway are
either additional employees of DRM and/or RMC Group, Inc., which are paid
directly by those companies, or Peoplesway's independent contractors, and it is
anticipated that this arrangement will continue for the foreseeable future.
Item 11. Security Ownership of Certain Beneficial Owners and Management
(a) Security Ownership of Certain Beneficial Owners
The following Table sets forth the shares held by those persons who own more
than five percent of Peoplesway's common stock as of March 31, 2000, based upon
15,607,969 shares outstanding.
Name and address of
Title of Class beneficial owner Number of shares Percent of class
---------------- ----------------- ------------------ ----------------
Common Donald R. "Pete" Monroe 12,000,000 77.9%
2969 Interstate Street
Charlotte, NC 28208
(b) Security Ownership of Management
The following table sets forth the shares held by Peoplesway directors and
officers as of March 31, 2000.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Name and address of
Title of Class . . . . . . . beneficial owner Number of shares Percent of class
---------------------------- ----------------------- ----------------- ----------------
Common . . . . . . . . . . . Donald R. "Pete" Monroe 12,000,000 77.9%
2969 Interstate Street
Charlotte, NC 28208
Common . . . . . . . . . . . Matthew M. Monroe 0 0%
2969 Interstate Street
Charlotte, NC 28208
Common . . . . . . . . . . . Eugene M. Johnston 0 0%
2969 Interstate Street
Charlotte, NC 28208
</TABLE>
Ownership of shares by directors and officers of Peoplesway as a group: 77.9%
(c) Changes in Control
We know of no contractual arrangements which may at a subsequent date result in
a change of control in the Company.
Item 12. Certain relationships and Related Transactions
Following are the transactions between Peoplesway and members of management,
directors, officers, 5% shareholders, and promoters of Peoplesway:
Agreements with DRM and its Subsidiaries.
The majority of our goods and services are available through an "alliance" with
DRM, Inc. and its subsidiaries, RMC Group, Inc. and RMC Group Canada, Ltd.
("DRM"). Each of the officers and directors of Peoplesway is also an officer
and/or director of DRM, Inc., RMC Group, Inc., and/or RMC Group Canada, Ltd, and
therefore, all sales through Peoplesway benefit related parties. The "alliance"
between the parties has been evidenced by a formal written agreement between the
parties such that all goods and service, which DRM or its subsidiaries offer for
sale, are listed on, and for sale through, the Peoplesway Web site. Following
each internet sale of a DRM-related good or service, Peoplesway then pays to DRM
an agreed upon wholesale price.
Peoplesway has had discussions with public relations companies that would
promote Peoplesway, but none of these discussions have resulted in any
definitive agreements.
Item 13. Exhibits and Reports on Form 8-K
(a) Financial Statements
1. The following financial statements of Peoplesway are included in Part II,
Item 7:
Independent Auditors' Report 20
Balance Sheet - March 31, 2000 21
Statements of Operations - Years Ended
March 31, 2000 and 1999 22-23
Statements of Cash Flows - Years Ended
March 31, 2000 and 1999 24
Statements of Stockholders' Equity - Years Ended
March 31, 2000 and 1999 25
Notes to Financial Statements 26-32
2. Exhibits
3. Articles of Incorporation as amended and bylaws are incorporated by reference
to Exhibit No. 1 of Form 10-SB as amended filed November 2000.
27 Financial Data Schedule
(b) Reports on Form 8-K
NONE
SIGNATURE PAGE FOLLOWS
----------------------
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has caused this report to be signed on its behalf by the undersigned,
hereunto duly authorized.
PEOPLESWAY.COM, INC.
Date: December 29, 2000 By: /s/ Donald R Monroe
-----------------------
Donald R. Monroe
Chairman of the Board
Date: December 29, 2000 By: /s/ Matthew M. Monroe
-------------------------
Matthew M. Monroe
President and Director
Date: December 29, 2000 By: /s/ Eugene M. Johnston
--------------------------
Eugene M. Johnston
CEO, Secretary/Treasurer and Director
