U.S. Securities & Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission file Number 0-29711
PageLab Network, Inc.
(Exact name of small business issuer)
Minnesota 41-1596056
(State of incorporation) IRS Employer Identification number
43 Main St SE, Suite #228, Minneapolis, MN 55414
(Address of principal executive offices)
(612) 362-9224
(Registrant's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter periods 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]
The number of shares outstanding of each of the registrant's classes of
capital stock, as of May 1, 2000 :
Common Stock, no par value, 10,407,665 shares.
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PageLab Network, Inc.
Index
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Page
----
Balance Sheets -
March 31, 2000 and December 31, 1999 3
Statements of Operations -
Three months ended March 31, 2000 and 1999 4
Statements of Stockholders' Equity -
Three months ended March 31, 2000 5
Statements of Cash Flows -
Three months ended March 31, 2000 and 1999 6
Notes to Financial Statements - March 31, 2000 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 7
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 8
ITEM 2. CHANGE IN SECURITIES AND USE OF PROCEEDS 8
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 8
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 8
ITEM 5. OTHER INFORMATION 8
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 8
SIGNATURES 9
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PAGELAB NETWORK, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
March 31, December 31,
2000 1999
------------ ------------
(unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash $ 168,402 $ 18,441
Accounts receivable 0 3,247
Prepaid expenses 734 1,628
------------ ------------
Total current assets 169,136 23,316
PROPERTY AND EQUIPMENT, NET 21,878 17,195
INTANGIBLES, NET 223,044 235,034
------------ ------------
TOTAL ASSETS $ 414,058 $ 275,545
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable $ 41,525 $ 9,035
Current portion of long-term debt 27,900 36,879
------------ ------------
Total current liabilities 69,425 45,914
LONG-TERM DEBT, NET OF CURRENT PORTION 113,420 161,569
STOCKHOLDERS' EQUITY
Common Stock, 40,000,000 shares authorized;
no par or stated value 723,132 307,500
Accumulated deficit (491,919) (239,438)
------------ ------------
231,213 68,062
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 414,058 $ 275,545
============ ============
</TABLE>
See Accompanying Notes to Financial Statements.
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PAGELAB NETWORK, INC.
STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Three months ended
March 31,
---------------------------------
2000 1999
------------ ------------
<S> <C> <C>
REVENUES $ 1,809 $ -
COSTS AND EXPENSES:
Costs of revenues earned 14,568 -
Selling, general and administrative 154,668 -
Research and development 83,419 -
------------ ------------
Total Costs and Expenses 252,655 -
------------ ------------
OPERATING INCOME (LOSS) (250,846) -
OTHER INCOME (EXPENSE):
Interest expense (2,437) -
Interest income 802 -
------------ ------------
NET LOSS $ (252,481) $ -
============ ============
WEIGHTED AVERAGE SHARES OUTSTANDING 8,757,535
============
EARNINGS PER SHARE $ (0.03)
============
</TABLE>
See Accompanying Notes to Financial Statements.
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<PAGE>
PAGELAB NETWORK, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
(unaudited)
<TABLE>
<CAPTION>
SHARES OF TOTAL
COMMON STOCK COMMON ACCUMULATED STOCKHOLDERS'
OUTSTANDING STOCK DEFICIT EQUITY
----------- --------- --------- --------
<S> <C> <C> <C> <C>
Balance, December 31, 1999 $ 8,457,665 $ 307,500 $(239,438) $ 68,062
Common Stock issued, January 2000 1,950,000 390,000 390,000
Reduction of Subscription Notes Receivable, February 2000 3,334 3,334
Stock-based compensation expense 22,298 22,298
Net loss for the period ended March 31, 2000 (252,481) (252,481)
----------- --------- --------- --------
Balance, March 31, 2000 $10,407,665 $ 723,132 $(491,919) $231,213
=========== ========= ========= ========
</TABLE>
See Accompanying Notes to Financial Statements.
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PAGELAB NETWORK, INC.
STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Three months ended
March 31,
---------------------------------
2000 1999
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (252,481) $ -
Adjustments required to reconcile net loss to
net cash required by operating activities:
Depreciation and amortization 13,373 -
Stock-based compensation expense 22,298 -
(Increase) decrease in:
Accounts receivable 3,247 -
Prepaid expenses 894 -
Increase (decrease) in:
Accounts Payable 32,490 -
------------ ------------
NET CASH USED IN OPERATIONS (180,179) -
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (5,741) -
Purchase of intangibles (325) -
------------ ------------
NET CASH USED IN INVESTING ACTIVITIES (6,066) -
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock and warrants 343,334 -
Reduction of long-term debt (7,128) -
------------ ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 336,206 -
------------ ------------
INCREASE IN CASH AND CASH EQUIVALENTS 149,961 -
BEGINNING CASH BALANCE 18,441 -
------------ ------------
ENDING CASH BALANCE $ 168,402 $ -
============ ============
NON-CASH TRANSACTIONS:
Long-term Debt Converted to Common Stock $ 50,000
</TABLE>
See Accompanying Notes to Financial Statements.
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PageLab Network, Inc.
CONDENSED NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information. They should be read in conjunction with the financial statements
for the year ended December 31, 1999 included in the Company's Form 10SB
registration statement. In the opinion of management, the interim condensed
financial statements include all adjustments (consisting of normal recurring
accruals) necessary for the fair presentation of the results for interim periods
presented. The results of operations for the three months ended March 31, 2000,
are not necessarily indicative of the results to be expected for the full year.
Earnings per share is computed using the weighted average shares of common stock
outstanding during the period as reduced by the shares held by the Company in an
Investment Account. Options and warrants are anti-dilutive and were excluded
from the calculation.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS FOR THE QUARTER ENDED MARCH 31, 2000
Our purpose is to enable e-commerce merchants to gain market share on the web by
obtaining ideal Internet customer traffic in a cost-effective manner. This is
accomplished by focusing on search engine technologies and expert services that,
on one hand, allows Internet users to receive highly relevant search results
through dialogue, while on the other hand, providing e-commerce merchants with
visibility and affiliations that help them gain market share on the web.
The results of operations for the period ended March 31, 2000 do not include
quarter-to-quarter comparisons since the Company did not commence operations
until July 1999.
As a result of a decision in late 1999 to improve our core technology and
realign ourselves with a different target customer base, the revenue stream from
merchant advertising fees has decreased from levels achieved during the third
and fourth quarters of 1999. We expect that the technology improvements will be
completed during the quarter ended June 30, 2000. Accordingly, we believe that
these improvements, along with current business development efforts to attract
larger, more web savvy e-commerce merchants, will result in the growth of
revenue streams from merchant advertising and transaction fees in future
quarters. Since the nature of these revenue streams is based on performance with
respect to obtaining top rankings in major Internet search engines, we expect
that it will take up to 60 days beyond the completion of the technology
improvements to begin achieving revenue recognition.
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Research and development costs include internal and subcontracted expenses to
perform improvements to our core technology, as well as the development of a
proprietary search engine called Subjex(TM). Subjex(TM) is expected to be
released during the quarter ended June 30, 2000.
Selling, general and administrative expenses for the quarter ended March 31,
2000 include approximately $50,000 of business planning and advisory services
fees associated with the Company's business development plans and the Form 10SB
registration process with the Securities and Exchange Commission. In addition,
we have accrued stock compensation expense in March 2000 in the amount of
$22,298 in relation to stock options granted to certain consultants.
We believe that our working capital is sufficient to fund operations through May
2000. To address the liquidity needs beyond May 2000, we are currently seeking
up to $1.5 million of equity or convertible debt financing for purposes of
additional working capital. We also are reviewing other alternatives including,
but not limited to a temporary bridge note financing, a credit facility with a
financial institution, and warrant exercises.
PART II. OTHER INFORMATION
Item 1 - Legal Proceedings
None.
Item 2 - Changes in Securities and Use of Proceeds
In January 2000, the Company completed the sale of Common Stock in conjunction
with a private placement offering. The total shares and money raised in
conjunction with this offering, which originated in November 1999, was 2,700,000
shares and $540,000, respectively. All such shares were included in the
Company's Form 10SB registration statement filed in February 2000.
Item 3 - Defaults on Senior Securities
None.
Item 4 - Submission of Matters to a Vote of Security Holders
None.
Item 5 - Other Information
None.
Item 6 - Exhibits and Reports on Form 8-K
None.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
PageLab Network, Inc.
(registrant)
/s/ Andrew D. Hyder
-----------------------------------------
Andrew D. Hyder, President and CEO
/s/ John Brand
----------------------------------------
John Brand, Chief Financial Officer
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<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 168,402
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 169,136
<PP&E> 21,878
<DEPRECIATION> 0
<TOTAL-ASSETS> 414,058
<CURRENT-LIABILITIES> 69,425
<BONDS> 0
0
0
<COMMON> 723,132
<OTHER-SE> (491,919)
<TOTAL-LIABILITY-AND-EQUITY> 414,058
<SALES> 1,809
<TOTAL-REVENUES> 1,809
<CGS> 14,568
<TOTAL-COSTS> 252,655
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,437
<INCOME-PRETAX> (252,481)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (252,481)
<EPS-BASIC> (.03)
<EPS-DILUTED> (.03)
</TABLE>
