FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
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(X) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended September 30, 2000
or
( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
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Commission File Number: 033-05384
GPN Network, Inc.
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(Exact name of Registrant as specified in its charter)
Delaware 13-3301899
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5000 Birch St., West Tower, Ste 4900, Newport Beach, California 92660
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(Address of principal executive offices) Zip Code
Registrant's telephone number, including area code (949) 752-2797
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Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve months or for such shorter period that the
Registrant was required to file such reports, and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
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The number of shares outstanding of Registrant's common stock as of
November 7, 2000 was 10,537,239.
<PAGE>
GPN NETWORK, INC. AND SUBSIDIARIES
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TABLE OF CONTENTS
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Page Number
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheets as of
September 30, 2000 (unaudited)................... 3
Consolidated Statements of Operations
and Comprehensive Loss for the Three and Nine
months ended September 30, 2000 (unaudited)..... 4
Consolidated Statement of Cash Flows for the
Nine months ended September 30, 2000 (unaudited). 5
Notes to Consolidated Financial Statements....... 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations... 12
PART II. OTHER INFORMATION
Item 1. Legal proceedings......................... 14
Item 2. Changes in Securities and Use of Proceeds. 15
Item 3. Defaults Upon Senior Securities........... 15
Item 4. Submission of Matters to a Vote of
Securities Holders........................ 15
Item 5. Other Information......................... 15
Item 6. Exhibits and Reports on Form 8-K.......... 15
Signatures................................ 16
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<PAGE>
ITEM 1. FINANCIAL STATEMENTS
GPN Network, Inc. and Subsidiaries
Consolidated Balance Sheet
ASSETS September 30, 2000
--------------------
Current assets: (Unaudited)
Cash and cash equivalents $ 1,286,668
Marketable equity securities 137,818
Accounts receivable 63,788
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Total current assets 1,488,274
Property and equipment, net of accumulated
depreciation of $48,053 386,275
Capitalized web site development cost, net
of accumulated amortization of $24,434 73,302
Other assets 42,874
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$ 1,990,725
==================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 84,061
Deferred revenue 241,300
Other liabilities 150,000
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Total liabilities 475,361
Minority interest 429,450
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.001 par value;
10,000,000 shares authorized;
no shares outstanding -
Common stock, $0.001 par value;
50,000,000 shares authorized;
10,537,239 shares issued and outstanding 10,537
Additional paid-in capital 2,678,474
Deferred compensation (12,500)
Accumulated other comprehensive income (116,148)
Accumulated deficit (1,474,449)
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Total stockholders' equity 1,085,914
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$ 1,990,725
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GPN Network, Inc. and Subsidiaries
Consolidated Statement of Operations and Comprehensive Loss
For the Three For the Nine
Months Ended Months Ended
September 30, 2000 September 30, 2000
(unaudited) (unaudited)
--------------------- --------------------
Revenues $ 138,932 $ 138,932
---------------- ------------------
Operating expenses:
Employee compensation 358,199 827,813
Selling, general and
administrative expenses 263,445 835,134
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Total operating expenses 621,644 1,662,947
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Operating loss (482,712) (1,524,015)
Other income (expense):
Interest income 18,343 51,166
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Loss before provision for taxes (464,369) (1,472,849)
Provision for taxes - 1,600
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Net loss (464,369) (1,474,449)
Other comprehensive income -
unrealized loss on marketable
equity securities, net of tax of $0 (70,863) (116,148)
---------------- ------------------
Comprehensive loss $ (535,232) $ (1,590,597)
================ ==================
Basic and diluted net loss per
common share $ (0.04) $ (0.14)
================ ==================
Basic and diluted weighted average
common shares outstanding 10,776,174 10,295,014
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GPN Network, Inc. and Subsidiaries
Consolidated Statement of Cash Flows
For the Nine
Months Ended
September 30, 2000
---------------------
Cash flows from operating activities:
Net loss $ (1,474,449)
Estimated fair market value of vested common
stock granted to employees 37,751
Estimated fair market value of warrants
granted to consultant 12,990
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 72,552
Write-off of property and equipment 12,000
Changes in operating assets and liabilities:
Accounts receivable (63,788)
Other assets (18,609)
Accounts payable and accrued expenses 59,731
Deferred revenue (12,666)
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Net cash used in operating activities (1,374,488)
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Cash flows from investing activities:
Cash paid in connection with DMRX acquisition (300,000)
Purchases of property and equipment (296,328)
Costs incurred to develop web site (97,736)
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Net cash used in investing activities (694,064)
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Cash flows from financing activities:
Payments for stock buyback (300,000)
Founders' capital contribution 500
Proceeds from the sale of common stock,
net of offering costs of $264,185 3,225,270
Proceeds from the sale of subsidiary
common stock, net of offering
costs of $85,050 429,450
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Net cash provided by financing activities 3,355,220
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Net increase in cash 1,286,668
Cash at beginning of period -
Cash at end of period $ 1,286,668
================
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ -
================
Income taxes $ -
================
See notes to accompanying financial statements for
additional non-cash investing and financing activities.
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GPN Network, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
NOTE 1 - BASIS OF PRESENTATION
------------------------------
The financial statements of GoPublicNow.com ("GPN" or the "Company") for the
three and nine months ended September 30, 2000 are unaudited. Certain
information and note disclosures normally included in the financial statements
prepared in accordance with generally accepted accounting principles have been
omitted. These financial statements should be read in conjunction with the
audited financial statements and notes thereto included in GPN's Form 8K/A as of
and for the period ended March 31, 2000. In the opinion of management, the
financial statements contain all adjustments, consisting of normal recurring
adjustments, necessary to present fairly the financial position of GPN for the
periods presented. The interim operating results may not be indicative of
operating results for the full year or for any other interim periods.
NOTE 2 - THE COMPANY
--------------------
GoPublicNow.com, Inc. ("GPN" or the "Company") was incorporated on December 2,
1999 according to the laws of Nevada. Operations for the nine months ended
September 30, 2000 are indicative of the operations from December 2, 1999 (date
of inception) through September 30, 2000 as the Company had no operations from
December 2, 1999 through December 31, 1999. The Company was in the development
stage through August 31, 2000. During the development stage, the Company was
primarily engaged in raising capital, obtaining financing, developing its web
site, advertising and marketing the Company, and administrative functions. The
Company provides a web site dedicated to helping their customers grow and obtain
financing for their business ventures.
Pursuant to an acquisition agreement (the "Acquisition Agreement") effective
April 6, 2000, the Company ("GPN-Nevada") completed a transaction whereby it was
merged with and into DermaRX Corporation ("DMRX") and the separate corporate
existence of GPN-Nevada ceased. The transaction was recorded as a "reverse
acquisition" (the "Merger") where GPN-Nevada was considered to be the accounting
acquiror as it retained control of DMRX after the merger. Simultaneously with
the Merger, the name DMRX was changed to GoPublicNow.com ("GPN"), and all the
outstanding shares of common stock of GPN-Nevada were exchanged on a one-for-one
basis for shares of common stock of GPN. Immediately prior to the merger, the
common stock of DMRX was reduced by a one for five reverse split.
At the time of the merger DMRX had 766,117 shares outstanding. By virtue of the
merger, the shareholders of GPN-Nevada acquired 10,219,472 shares of DMRX. The
total issued, outstanding, and committed shares of the combined entities
subsequent to the merger was 10,985,589 shares. Since DMRX's operations from
December 2, 1999 through the date of acquisition were insignificant, a pro forma
condensed consolidated balance sheet and condensed consolidated statement of
operations as of and for the period ended September 30, 2000 are not presented
here. In addition, since DMRX prior quarter results were insignificant, the
Company believes the historical results are not indicative of the Company's
future results of operations. As a result, the Company has not presented
comparative results of operations.
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<PAGE>
GPN Network, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Termination of Development Stage
--------------------------------
As noted above, the Company was incorporated in 1999 and had been principally
engaged in raising capital, obtaining, financing, advertising and promoting the
Company, and developing its website. Planned operations, as discussed above,
have commenced in relation to the Company's business plan. Accordingly, the
Company no longer is to be considered a development stage enterprise.
Subsidiaries
------------
Pursuant to the Merger, the Company acquired the subsidiary corporation
Dermedics, Inc. ("Dermedics"). Dermedics has no employees or operations, and
minimal assets.
In April 2000, the Company provided initial funding of $200,000 for its
majority-owned subsidiary GoBizNow.com. The Company commenced a private
placement memorandum selling a maximum of 300,000 shares of common stock at
$1.75. As of September 30, 2000, GoBizNow.com had sold 294,000 shares of common
stock for $429,450 net of offering costs of $85,050 at which time the offering
was considered closed. As of September 30, 2000, the minority interest
percentage owned was 6.0%. Due to the percentage owned by the minority interests
being less than 10% and GoBizNow.com percentage of the consolidated loss being
less than 10%, the Company has not recorded minority interest in GoBizNow.com's
net loss as of September 30, 2000.
Pursuant to Staff Accounting Bulletin 84 ("SAB 84") when offering the a
subsidiary's direct sale of its un-issued shares, a gain or loss may be required
to be reflected in the consolidated income statements of the parent. However,
SAB 84 does not require a gain or loss to be recognized in situations where the
subsidiary is a newly-formed non-operating entity, a startup or development
stage company or an entity whose ability to continue in existence is in
question. Due to the subsidiary being newly formed and in the development stage,
the Company has recognized no gain or loss on the sale of the subsidiary's stock
at September 30, 2000.
The Company intends to operate a broker dealer in order to provide funding and
other financial services for its customers. In May 2000, the Company
incorporated its subsidiary GPN Securities, Inc. The Company intends to develop
GPN Securities, Inc. as an in-house broker dealer. In July 2000, the Company
incorporated its subsidiary GoNow Securities, Inc. The Company intends to
utilize GoNow Securities, Inc. as an acquisition vehicle to purchase a broker
dealer. There has been no activity in either entity at September 30, 2000. (See
Note 6 for subsequent activity.)
Principles of Consolidation
---------------------------
The consolidated financial statements include the accounts of the Company and
GoBizNow.com, GPN Securities, Inc., GoNow Securities, Inc., and Dermedics, Inc.
GoBizNow.com and GoNow Securities, Inc. are majority owned subsidiaries; GPN
Securities, Inc. and Dermedics, Inc. are wholly owned subsidiaries. GoBizNow.com
is an operating company, while GoNow Securities, GPN Securities, and Dermedics,
Inc. are in the development stage. All significant intercompany balances and
transactions have been eliminated in consolidation.
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<PAGE>
GPN Network, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Risks and Uncertainties
-----------------------
The Company is a start-up company subject to the substantial business risks and
uncertainties inherent to such an entity, including the potential risk of
business failure.
The Company has a loss of $1,474,449 for nine months ended September 30, 2000.
The Company's cash balance at September 30, 2000 was $1,286,668. There is
substantial doubt as to weather revenues projected to be generated from new
contracts subsequent to September 30, 2000 will be sufficient to fund the
Company's operations, capital expenditures, working capital requirements and web
site development costs for the next twelve months. There is no assurance the
Company will be able to generate sufficient revenues or obtain sufficient funds
when needed, or that such funds, if available, will be obtained on terms
satisfactory to the Company.
Marketable Securities
---------------------
Marketable securities consist of equity securities and are stated at fair market
value. During the nine months ended September 30, 2000, the Company recorded
deferred revenue based upon the receipt of marketable securities valued at
$253,966 in consideration for future services from an unrelated party. This
deferred revenue is being recognized at the rate of $14,109 per month over
eighteen months beginning in September 2000. Pursuant to the Statements of
Financial Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities", available for sale investments are to be recorded
at their fair market value, with any unrealized gain or loss to be reported as
other comprehensive income (loss) for the period. As of September 30, 2000, the
Company determined the fair market value of the underlying marketable securities
to be $137,818 and accordingly, reported an unrealized loss of $70,863 and
$116,148 for the three and nine months ended September 30, 2000, respectively,
as other comprehensive loss and cumulative unrealized loss.
Capitalized Web Site Development
--------------------------------
In March 2000, the Emerging Issues Task Force reached a consensus on Issue No.
00-2, "Accounting for Web Site Development Costs" ("EITF 00-2"). Pursuant to
EITF 00-2, the Company has capitalized approximately $98,000 of web site
development costs as of September 30, 2000. The Company began amortizing this
website in April, 2000. For the six months ended September 30, 2000, the Company
has recognized $24,434 of amortization expense on its website.
Revenue Recognition
-------------------
The Company recognizes revenue during the month in which services are provided
and on a straight-line basis over the life of the membership dues received. On
certain agreements, the Company will take an equity position in the client
rather than a cash position, which the Company will record pursuant to SFAS 115
and record deferred revenue and recognize the revenue over the contract life, as
defined. In addition, the agreements may contain a return of equity clause which
specifies that the Company may be required, under certain circumstances, to
return all equity instruments to its clients. In contracts with a return of
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GPN Network, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
equity clause, the Company does not record any revenue or deferred revenue until
such time as the return of equity clause is removed or is otherwise no longer is
in effect.
During the quarter ended September 30, 2000 the Company signed a business
advisory services agreement with Lotto Concepts, Inc. ("Lotto Concepts"),
whereby the Company will receive 500,000 shares of Lotto Concepts, valued at
$1,000,000 (based on shares recently sold in a private placement offering at
$2.00 per share). The Company does not record revenue or deferred revenue until
such time as Management is reasonably confident in the ultimate collectibility,
in cash, of the related receivable. As such, as of September 30, 2000 no amount
of revenue or deferred revenue has been recognized on this contract.
Earnings Per Share
------------------
The Company has adopted Statement of Financial Accounting Standards No. 128
("SFAS 128"), "Earnings Per Share." Under SFAS 128, basic earnings per share is
computed by dividing income available to common shareholders by the
weighted-average number of common shares assumed to be outstanding during the
period of computation. Diluted earnings per share is computed similar to basic
earnings per share except that the denominator is increased to include the
number of additional common shares that would have been outstanding if the
potential common shares had been issued and if the additional common shares were
dilutive. Because the Company has incurred net losses, basic and diluted loss
per share are the same as additional potential common shares would be
anti-dilutive.
Stock Compensation
------------------
The Company has adopted FASB Interpretation No. 44 ("FIN 44") "Accounting for
Certain Transactions involving Stock Compensation," an interpretation of APB
Opinion 25 ("APB 25"). FIN 44 clarifies the application of APB 25 for (a) the
definition of employee for purposes of applying APB 25, (b) the criteria for
determining whether a plan qualifies as a non-compensatory plan, (c) the
accounting consequence for various modifications to the terms of a previously
fixed stock option or award, and (d) the accounting for an exchange of stock
compensation award in a business combination. FIN 44 did not have a material
effect on the financial statements.
Recent Accounting Pronouncements
--------------------------------
The FASB issued Statement of Financial Accounting Standards No. 133 ("SFAS
133"), "Accounting for Derivative Instruments and Hedging Activities." SFAS 133
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. It requires that an entity recognize all derivatives as
either assets or liabilities on the balance sheet at their fair value. This
statement, as amended by SFAS 137, is effective for financial statements for all
fiscal quarters to all fiscal years beginning after June 15, 2000. The Company
does not expect the adoption of this standard to have a material impact on its
results of operations, financial position or cash flows as it currently does not
engage in any derivative or hedging activities.
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<PAGE>
GPN Network, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin (SAB) 101, "Revenue Recognition," which outlines the basic criteria
that must be met to recognize revenue and provides guidance for presentation of
revenue and for disclosure related to revenue recognition policies in financial
statements filed with the Securities and Exchange Commission. The effective date
of this pronouncement is the fourth quarter of the fiscal year beginning after
December 15, 1999. The Company believes that adopting SAB 101 will not have a
material impact on the Company's financial position and results of operations.
Reclassifications
-----------------
Certain reclassifications were made to prior period amounts, enabling them to
conform to current period presentation.
NOTE 3 - OTHER LIABILITIES
---------------------------
In June 2000, the Company signed a software licensing agreement for $300,000, of
which the Company paid $150,000 and accrued $150,000 during the period ended
September 30, 2000. The software is for website development; as a result the
Company capitalized the software licensing agreement under Property and
Equipment in the accompanying balance sheet at September 30, 2000 and will
amortize it over the life of the licensing agreement.
NOTE 4 - STOCKHOLDERS' EQUITY
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Preferred Stock
---------------
The Company's articles of incorporation authorize up to 10,000,000 shares of
$0.001 par value preferred stock. Shares of preferred stock may be issued in one
or more classes or series at such time the Board of Directors determine. All
shares of any series shall be equal in rank and identical in all respects. As of
September 30, 2000, no preferred shares have been designated or issued.
Common Stock
------------
In July 2000, the Company recorded an additional $13,025 of direct costs
associated with a previous sale of common stock.
Stock Cancellations
-------------------
On September 21, 2000, in return for the Company's agreement to release certain
of the previous DMRX shareholders (the "Shareholders") from claims which may
have arisen pursuant to the Merger (see Note 5), the Shareholders agreed to
return to the Company for cancellation 250,000 of the outstanding shares of
Common Stock of the Company.
On September 15, 2000, the Company canceled 16,000 shares of common stock which
had been issued in error in 1999. The stock was issued to a consultant to the
Company at the time of a 5 for 1 reverse stock split. The shares were
inadvertently issued on a post-split basis and should have been issued on a
pre-split basis.
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GPN Network, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Stock Options
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From time to time, the Company may issue non-plan stock options pursuant to
various agreements with other compensatory arrangements. Under the terms of
various employment agreements with employees, the Company issued options to
purchase 381,250 shares of the Company's common stock at exercise prices ranging
from $0.25 per share to $3.75 per share (the estimated fair market value on the
date of grant by the Company). The options vest over a periods ranging from two
months to twenty-four months and are exercisable through March 2010.
Warrants
--------
From time to time, the Company issues warrants pursuant to various agreements
and other compensatory arrangements. Under the terms of various agreements with
consultants, the Company issued warrants to purchase 20,125 shares of the
Company's common stock at exercise prices ranging from $0.25 per share to $3.75
per share. The warrants vest in three months from the date of grant and are
exercisable through February 2010. Under SFAS 123, $12,990 of consulting expense
is to be recognized, of which $0 and $12,990 has been recognized for the three
and nine months ended September 30, 2000, respectively. In addition, the Company
issued 2,222,244 warrants to various investors as part of various private
placement memorandums.
NOTE 5 - CONTINGENCIES
----------------------
On April 12, 1999, the Company, under its former management, filed a complaint
in the Denver District Court against two former employees of the Company,
entitled DermaRX Corporation vs. Gerit D. Mulder and Lee Booras, alleging
improper use of trade secrets and confidential information, breach of fiduciary
duty, failure to assign patent rights and for return of unearned bonus payments.
On July 15, 1999, the defendants filed a response denying the claims and
asserting counterclaims for breach of contract, failure to pay compensation
including cash and stock. Current management of the Company is not fully aware
of all of the facts in connection with the action, and has not taken any steps
to further prosecute the action since the date of the Merger. Management cannot
presently predict the outcome of this action or the affect upon the Company if
the outcome is unfavorable, but has no reason to believe that the outcome will
be unfavorable to the Company or that an unfavorable outcome would result in
material liability to the Company.
NOTE 6 - SUBSEQUENT EVENTS
--------------------------
Name Change
-----------
On October 23, 2000, the Company announced that it is changing its name from
GoPublicNow.com to "GPN Network". The Company believes that this name change
will better reflect its business model, which includes traditional "brick and
mortar" business entities as well as an internet presence. The change became
effective November 8, 2000.
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GPN Network, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
GoNow Securities NASD approval
------------------------------
On October 24, 2000, the Company's subsidiary GoNow Securities, Inc. was
approved for membership to the National Association of Securities Dealers
("NASD").
Heritage West
-------------
On November 2, 2000, the Company announced that it had signed a non-binding
letter of intent to acquire 100% of the assets and business of Heritage West
Securities, Inc., a NASD licensed broker-dealer. This transaction is subject to
various conditions, including approval by the NASD and other state and Federal
regulatory agencies.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
-----------------------------------------------
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
The following information should be read in conjunction with the
financial statements and the notes thereto. The analysis set forth below is
provided pursuant to applicable Securities and Exchange Commission regulations
and is not intended to serve as a basis for projections of future events.
EXCEPT FOR HISTORICAL INFORMATION CONTAINED HEREIN, THE MATTERS
DISCUSSED IN THIS FORM 10-QSB ARE FORWARD-LOOKING STATEMENTS THAT ARE SUBJECT
TO CERTAIN RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THOSE SET FORTH IN SUCH FORWARD LOOKING STATEMENTS. SUCH
FORWARD-LOOKING STATEMENTS MAY BE IDENTIFIED BY THE USE OF CERTAIN
FORWARD-LOOKING TERMINOLOGY, SUCH AS "MAY," "WILL," "EXPECT," "ANTICIPATE,"
"INTEND," "ESTIMATE," "BELIEVE" OR COMPARABLE TERMINOLOGY THAT INVOLVES RISKS OR
UNCERTAINTIES. ACTUAL FUTURE RESULTS AND TRENDS MAY DIFFER MATERIALLY FROM
HISTORICAL AND ANTICIPATED RESULTS, WHICH MAY OCCUR AS A RESULT OF A VARIETY OF
FACTORS. SUCH RISKS AND UNCERTAINTIES INCLUDE, WITHOUT LIMITATION, GPN NETWORK'S
LIMITED OPERATING HISTORY, THE UNPREDICTABILITY OF ITS FUTURE REVENUES, THE
UNPREDICTABLE AND EVOLVING NATURE OF ITS KEY MARKETS, REGULATION IN THE
SECURITIES AND MERGERS AND ACQUISITIONS INDUSTRY, COMPETITION, INTERNET-RELATED
RISKS, DEPENDENCE ON KEY PERSONNEL, DEPENDENCE ON CONTENT ACQUISITION, CREATION
AND LICENSING, AND THE GROWTH OF GPN NETWORK'S NEED FOR ADDITIONAL CAPITAL. GPN
NETWORK UNDERTAKES NO OBLIGATION TO UPDATE ANY FORWARD-LOOKING STATEMENT,
WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE. READERS
SHOULD CAREFULLY REVIEW THE FACTORS SET FORTH IN OTHER REPORTS OR DOCUMENTS THAT
GPN NETWORK FILES FROM TIME-TO-TIME WITH THE SEC AND MATTERS GENERALLY AFFECTING
ONLINE COMMERCE.
Overview
--------
The Company's websites are at the core of its business model. The Company
intends to list its client companies along with related information about the
client companies (including specific financing requirements) and provide access
to this information to funding sources. The Company recognizes revenue from
these agreements over the period during which client companies are listed on
this website. The Company's website became operational on September 1, 2000.
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The Company has been advised by its counsel that certain of its transactions
must be conducted through a broker-dealer. The Company is in the process of
obtaining a broker-dealer through both internal development and through
acquisition. If this is not achieved and the Company does not obtain a
broker-dealer, the Company would encounter significant difficulty in carrying
out its business plan.
RESULTS OF OPERATIONS - THREE MONTHS ENDED SEPTEMBER 30, 2000
-------------------------------------------------------------
Revenue
-------
The Company recognized revenue of $138,932 for the three month period ended
September 30, 2000. This revenue was derived primarily from e-commerce
consulting, business development services, and listing fees. $14,109 of this
amount consists of the recognition of deferred revenue based upon the receipt of
marketable equity securities in client companies.
Employee Compensation
---------------------
Employee compensation was $358,199 for the three months ended September 30,
2000. This amount consists primarily of officer and employee salaries.
Selling, General and Administrative expenses
--------------------------------------------
Selling, general, and administrative expenses were $263,445 for the three months
ended September 30, 2000. The primary components of this amount were legal and
accounting fees, depreciation and amortization, rent, advertising, and internet
content and service fees.
Interest Income and Expense
---------------------------
Interest income for the three months ended September 30, 2000 was $18,343. The
Company had no interest expense for the period.
Net Loss
--------
For the reasons stated above, the Company had a net loss of $464,369 for the
three months ended September 30, 2000.
RESULTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 2000
------------------------------------------------------------
Revenue
-------
The Company ended its development stage and began recognizing revenue in the
quarter ended September 30, 2000. The Company recognized revenue of $138,932 for
the nine months ended September 30, 2000. . This revenue was derived primarily
from e-commerce consulting, business development services, and listing fees.
$14,109 of this amount consists of the recognition of deferred revenue based
upon the receipt of marketable equity securities in client companies.
Employee Compensation
---------------------
Employee compensation was $827,813 for the nine months ended September 30, 2000.
This amount consists primarily of officer and employee salaries.
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Selling, General and Administrative expenses
--------------------------------------------
Selling, General and Administrative expenses were $835,134 for the nine months
ended September 30, 2000. The primary components of this amount are legal and
accounting fees; depreciation and amortization; rent; advertising; and a
write-down in value of the Company's website and telephone system.
Interest Income and Expense
---------------------------
Interest income for the nine months ended September 30, 2000 was $51,166. The
Company had no interest expense for the period.
Net Loss
--------
For the reasons noted above, the Company's net loss for the nine months ended
September 30, 2000 was $1,474,449.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
At September 30, 2000, the Company had $1,488,274 in current assets, including
$1,286,668 in cash. Also at September 30, current liabilities were $475,361. The
Company has used $1,374,488 in cash to fund its operations from the period of
inception to September 30, 2000. The Company generated its first revenue during
the quarter, but there is no guarantee that the Company will be able to generate
sufficient revenue to fund future operations. Under the Company's business
model, the Company is compensated largely by shares of common stock in its
client companies; thus the Company's success, including its ability to fund
future operations, depends largely on both the liquidity and market value of its
client company's common stock. There can be no assurance that the Company will
be able to liquidate its client company's common stock in sufficient volume to
fund the Company's future operations, if at all. As a result, the Company
expects its operations to continue to use net cash, and the Company may be
required to seek additional debt or equity financings during the coming
quarters.
There can be no assurance that the Company will be able to consummate debt or
equity financings in a timely manner on a basis favorable to the Company, or at
all.
PART II - OTHER INFORMATION
---------------------------
GPN NETWORK, INC. AND SUBSIDIARIES
----------------------------------
Item 1. Legal Proceedings
On April 12, 1999, the Company, under its former management, filed a
complaint in the Denver District Court against two former employees of
the Company, entitled DermaRX Corporation vs. Gerit D. Mulder and Lee
Booras, alleging improper use of trade secrets and confidential
information, breach of fiduciary duty, failure to assign patent rights
and for return of unearned bonus payments. On July 15, 1999, the
defendants filed a response denying the claims and asserting
counterclaims for breach of contract, failure to pay compensation
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<PAGE>
including cash and stock. Current management of the Company is not
fully aware of all of the facts in connection with the action, and has
not taken any steps to further prosecute the action since the date of
the Merger. Management cannot presently predict the outcome of this
action or the affect upon the Company if the outcome is unfavorable,
but has no reason to believe that the outcome will be unfavorable to
the Company or that an unfavorable outcome would result in material
liability to the Company.
Item 2. Changes in Securities and Use of Proceeds
There have been no sales of any unregistered instruments defining the
rights of the holders of Common Stock during the quarter.
Item 3. Defaults Upon Senior Securities
None.
Item 4: Submission of Matters to a Vote of Securities Holders' None.
Item 5: Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
Exhibits Description
27.1 Financial Data Schedule
Reports on Form 8-K
None.
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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, on November 13, 2000.
GOPUBLICNOW.COM
By: /s/ Bruce A. Berman
--------------------------------
Bruce A. Berman
President, Chief Executive Officer
By: /s/ Eric J. Hopkins
----------------------------------
Eric J. Hopkins
Chief Financial Officer
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