UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
[ 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
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Transition Period from to .
Commission File No. 0-20598
MONOGRAM PICTURES, INC.
(exact name of registrant as specified in its charter)
NEVADA 75-2293489
(State or other jurisdiction of (IRS Employer
incorporation organization) Identification No.)
120 St. Croix Avenue, Cocoa Beach, FL 32931
(Address of principal executive offices, including zip code)
(321) 799-3842
(Issuer's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required by Section 13 or 15(d) of the Securities and Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [x] No [ ]
The number of shares of the registrant's common stock, $0.001 par value,
outstanding as of November 10, 2000: 21,834,225.
<PAGE>
MONOGRAM PICTURES, INC.
FORM 10-QSB
QUARTER ENDED SEPTEMBER 30, 2000
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Consolidated Balance Sheet as of September 30, 2000.................... 1
Consolidated Statement of Operations for the Nine Months Ended
September 30, 2000...................................................2
Consolidated Statement of Cash Flows for the Nine Months Ended
September 30, 2000...................................................3
Notes to Interim Consolidated Financial Statements......................4
All schedules are omitted because they are not applicable or the required
information is shown in the financial statements or notes thereto.
Item 2 - Management's Discussion and Analysis ......................... 6
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings..............................................8
Item 2 - Changes in Securities..........................................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
<PAGE>
PART I
Item 1. Financial Statements.
<TABLE>
Monogram Pictures, Inc.
(formerly e Personnel Management.com)
Consolidated Balance Sheet
September 30, 2000 and December 31, 1999
<CAPTION>
September 30, December 31,
2000 1999
------------- ------------
<S> <C> <C>
Current Assets
Cash and Cash Equivalents $ 167,738 $ 406
Accounts Receivable 4,689 0
Prepaid Expenses 48,767 0
------- ------
Total Current Assets 221,194 406
Property and Equipment, Net (Note 3) 2,756,723 0
Other Assets
Security Deposits 2,250 0
Note Receivable 0 3,000,000
Other Advances 43,650 1,150
------ ---------
Total Other Assets 45,900 3,001,150
------ ---------
Total Assets $ 3,023,817 $3,001,556
======= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable $ 65,920 $ 40,000
Accrued Liabilities 51,566 23,700
Due to Related Party 0 105,784
------- -------
Total Current Liabilities 117,486 169,484
Stockholders' Equity
Preferred Stock: Authorized $0.01
Par Value, 5,000,000 Shares;
Issued and Outstanding, 175,000 1,750 1,750
Common Stock: Authorized $0.001
Par Value, 50,000,000 Shares;
Issued and Outstanding, 21,834,225
and 12,351,227 21,834 12,351
Additional Paid In Capital 19,751,378 16,738,931
Retained Earnings (Deficit) (16,868,631) (13,920,960)
---------- ----------
Total Stockholders' Equity 2,906,331 2,832,072
Total Liabilities and ---------- ----------
Stockholders' Equity $3,023,817 $3,001,556
======= =========
</TABLE>
1
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<TABLE>
Monogram Pictures, Inc.
(formerly e Personnel Management.com)
Consolidated Statement Of Operations (Unaudited)
For The Three and Nine Months Ended September 30, 2000 and 1999
<CAPTION>
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
2000 1999 2000 1999
------------ ------------ ------------ -----------
<S> <C> <C> <C> <C>
Revenues (Note 6) $ 458,299 $ 4,020 $ 633,136 $ 82,972
Cost of Revenues 423,682 1,000 597,070 74,749
------- ----- ------- ------
Gross Margin 34,617 3,020 36,066 8,223
Operating Expenses
General and
Administrative 395,103 126,150 3,304,691 2,109,892
--------- ------ --------- ---------
Operating Loss (360,486) (123,130) (3,268,625) (2,101,669)
Other Income (Expense)
Other Income (Note 8) 400,000 0 400,000 0
Interest Expense 0 0 0 2,008
Interest Income 246 0 839 0
Total Other ------- ----- ------- ------
Income (Expense) 400,246 0 400,839 (2,008)
------- ----- ------- ------
Net Income (Loss) Before
Cumulative Effect of
Accounting Change 39,760 (123,130) (2,867,786) (2,103,677)
Cumulative Effect of
Accounting Change 0 0 (8,003) 0
------ ------ --------- ---------
Net Loss Available to
Common Stockholders $ 39,760 $(123,130) $(2,875,789) $(2,103,677)
========== ======= ========== ===========
Basic Income (Loss) Per Common Share
------------------------------------
Income (Loss) Before Cumulative
Effect of Accounting
Change $ 0.002 $ (0.01) $ (0.16) $ (0.21)
Cumulative Effect
of Accounting Change - - - -
Net Income (Loss) $ 0.002 $ (0.01) $ (0.16) $ (0.21)
Basic Weighted Average Common
Shares Outstanding 20,184,225 11,450,783 18,461,532 10,169,950
========== ========== ========== ==========
</TABLE>
2
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<TABLE>
Monogram Pictures, Inc.
(formerly e Personnel Management.com)
Consolidated Statement Of Cash Flows (Unaudited)
For The Nine Months Ended September 30, 2000 and 1999
<CAPTION>
Nine Months Ended September 30: 2000 1999
---- ----
<S> <C> <C>
Cash Flows From Operating Activities
Net Loss $ (2,875,789) $(2,103,677)
Adjustments to Reconcile Net Loss
to Net Cash Provided By (Used In)
Operating Activities
Depreciation and Amortization 183,458 406,356
Common Stock Issued for Services 2,759,570 1,589,405
Write-off Start Up Expenses 8,003 0
Changes in Assets and Liabilities
(Increase) Decrease in Accounts Receivable 375 0
(Increase) Decrease in Prepaid Expenses (16,038) 0
(Increase) Decrease in Security Deposits (2,250) 0
(Increase) Decrease in Other Advances (42,500) (700)
Increase (Decrease) in Accounts Payable 4,464 (12,560)
Increase (Decrease) in Accrued Liabilities 9,646 0
--------- ----------
Total Adjustments 2,904,728 1,982,501
--------- ----------
Net Cash Used In Operating Activities 28,939 (121,176)
Cash Flows From Investing Activities
Purchase of Fixed Assets (8,516) -
----------
Cash Flows Used in Investing Activities (8,516) -
Cash Flows From Financing Activities
Repayments on Long-Term Debt - (897)
Cash Acquired in Acquisition of Subsidiary 7,509 -
Capital Contributions 166,300 28,996
Repayments to Related Party (45,000) -
Advances From Related Party 18,100 63,532
-------- -------
Net Cash Provided By Financing Activities 146,909 91,631
-------- -------
Increase (Decrease) in Cash and Cash Equivalents 167,332 (29,545)
Cash and Cash Equivalents, Beginning of Period 406 31,144
-------- --------
Cash and Cash Equivalents, End of Period $ 167,738 $ 1,559
======== ========
Supplemental Disclosure of Cash Flow Information:
Cash paid for:
Interest $ 0 $ 0
Income taxes $ 0 $ 0
Supplemental Schedule of Noncash Investing and Financing Activities:
Common Stock for Services Rendered $2,759,570 $1,589,405
Conversion of Debt to Equity $ 78,883 $ 11,975
Note Receivable in Exchange for Film Library ($3,000,000) $3,000,000
Acquisition of Subsidiary (Issuance of 400,000
shares of common stock in exchange for subsidiary):
Assets Acquired $ 56,851
Liabilities Assumed 39,675
------
Net Book Value of Company $ 17,176
======
</TABLE>
3
<PAGE>
Monogram Pictures, Inc.
(formerly e Personnel Management.com)
Notes To The Consolidated Interim Financial Statements
September 30, 2000
NOTE 1. Statement of Information Furnished
-------------------------------------------
The accompanying unaudited interim consolidated financial statements have
been prepared in accordance with Form 10QSB instructions and in the opinion
of management contains all adjustments (consisting of only normal recurring
adjustments) necessary to present fairly the financial position as of
September 30, 2000, the results of operations for the three and nine months
ended September 30, 2000, and the statement of cash flows for the nine months
ended September 30, 2000. These results have been determined on the basis of
generally accepted accounting principles and practices and applied
consistently with those used in the preparation of the Company's 1999 Annual
Report on Form 10-KSB.
Certain information and footnote disclosure normally included in the financial
statements presented in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that the
accompanying consolidated financial statements be read in conjunction with
the accompanying consolidated financial statements and notes thereto
incorporated by reference in the Company's 1999 Annual Report on Form 10-KSB.
NOTE 2. Significant Accounting Policies
----------------------------------------
As of June 1, 2000, the Company's subsidiary operates in the PEO industry
segment. See segment information in Note 6.
NOTE 3. Property and Equipment
-------------------------------
Property and Equipment consists of the following:
Furniture and Fixtures $ 17,496
Film Library 5,485,536
---------
Total 5,503,032
Accumulated Depreciation (2,746,309)
---------
Net Book Value $2,756,723
=========
Depreciation charged to operations for the nine months ended September 30,
2000, was $183,458.
NOTE 4. Long-lived Assets and Prior Period Adjustment
------------------------------------------------------
On August 17, 2000, Monogram repurchased the film library from Media
Classics Group, Inc., a related party, for $3,000,000, due to the Company's
change in business direction. During 1999, Monogram bought the film library
in a stock transaction for $2,500,000, then later sold its entire film library
for $3,000,000, recorded on the books a note receivable of $3,000,000 (due from
Media Classics Group, Inc.), and recognized a gain of $321,882. In connection
with the acquisition of the film library in 1999, the Company inadvertently
issued 150,000 shares of preferred stock instead of 175,000. The effect of
the additional 25,000 shares includes an adjustment to increase preferred
stock by $250, an increase to additional paid in capital of $249,750, and a
decrease to retained earnings of $250,000, representing an adjustment to the
gain originally recognized of $321,882 down to $71,882. As a result of the
repurchase, Monogram canceled the notes receivable of $3,000,000, recorded
the film library for $2,928,118, or net book value, and recorded as a prior
period adjustment to retained earnings a cancellation of the gain of $71,882.
The library is being amortized over a five year period.
4
<PAGE>
NOTE 5. Acquisition of Subsidiary
----------------------------------
On June 1, Monogram issued 400,000 shares of common stock in exchange for
100% ownership in General Personnel Management, Inc.(GPM) Assets acquired,
$56,851, exceeded liabilities assumed, $39,675, for a net book value of
$17,176. Cash acquired in the acquisition was $7,509. Monogram retains
this company as a subsidiary. GPM is in the Professional Employment
Organization industry.
NOTE 6. Segment Information
-----------------------------
During the first two quarters of 2000, the Company was an acquisition-seeking
company. During the second quarter, the Company acquired a subsidiary in the
PEO industry. The Company maintains subsidiary books separately. Management
did not allocate any corporate selling, general and administrative, or overhead
expenses to this subsidiary. Segment information is as follows at September 30,
2000:
Subsidiary Corporate Total
---------- --------- -----
Revenues $ 633,136 $ 0 $ 633,136
Operating Income (Loss) $ 3,781 $(3,272,406) $(3,268,625)
Total Assets $ 65,566 $ 2,958,251 $ 3,023,817
NOTE 7. Other Income
---------------------
Other Income of $400,000 represents cash received as a result of a settlement
agreement dated June 20, 2000, with the Company, Interstate Management
Services, Inc. (IMSC) and Employer Resource (ER). ER agreed to pay $400,000
to the Company as a settlement agreement for the rights to IMSC. IMSC was a
Professional Employment Organization which ER claimed had been performing
payroll services for IMSC clients. IMSC denied ER's claims to these rights.
The Company had purchased IMSC on March 14, 2000.
NOTE 8. Financial Results and Liquidity
----------------------------------------
To date, we have not been profitable and face all the risks common to companies
in their early stages of development, including undercapitalization and
uncertainty of funding sources, uncertain revenue streams, and difficulties
in managing growth. Our recurring losses raise substantial doubt about our
ability to continue as a going concern. Our financial statements do not
reflect any adjustments that might result from the outcome of this
uncertainty. We believe that despite the financial hurdles and funding
uncertainties going forward, we have under development a business plan that,
if successfully funded and executed, can enhance operating results.
The Company expects to incur losses as it expands its businesses and will
require additional funding. The satisfaction of our cash requirements
hereafter will depend on our ability to generate revenues from our film library
and to raise capital from external sources to fund operations. There is no
assurance that we will be able to raise funds, or if such funding is
available, that it will be on favorable terms.
5
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
----------------------------------------------------------------------------
When used in this discussion, the words "believes", "anticipates", "expects",
and similar expressions are intended to identify forward-looking statements.
Such statements are subject to certain risks and uncertainties, which could
cause actual results to differ materially from those projected. Readers are
cautioned not to place undue reliance on these forward-looking statements,
which speak only as of the date hereof. The Company undertakes no
obligation to republish revised forward-looking statements to reflect events
or circumstances after the date hereof or to reflect the occurrence of
unanticipated events. Readers are also urged to carefully review and
consider the various disclosures made by the Company which attempt to advise
interested parties of the factors which affect the Company's business, in
this report, as well as the Company's periodic reports on Forms 10-KSB,
10-QSB and 8-K filed with the Securities and Exchange Commission.
(1) Results of Operations
Three and Nine Months Ended September 30, 2000 versus September 30, 1999
------------------------------------------------------------------------
Revenues. Monogram's revenues for the three and nine months ended September
30, 2000, represent revenues derived from its subsidiary operations, General
Personnel Management, Inc., (GPM), a professional employment agency.
Monogram acquired this subsidiary on June 1, 2000, as part of its
acquisition-seeking efforts in the Professional Employment Organization (PEO)
industry, a direction Monogram is no longer going. GPM revenues are
anticipated to approximate $2,000,000 per year.
During the next twelve months, the Company expects to derive the majority of
its potential revenues from the sale of its film library footage. To date,
the Company has not relied on revenues for funding.
Costs of revenues for the three and nine months ended September 30, 2000 were
$423,682 and $597,070, respectively, and consisted entirely of costs of revenues
from its subsidiary operations, GPM. GPM gross margins for the three and nine
months ended September 30, 2000, were $34,617 and $36,066, respectively.
Revenues and costs of revenues for the corresponding periods of the prior year
were derived from Monogram's television subsidiary operations, discontinued
effective June 1999, which has helped to lighten the financial drain on the
Company.
General and Administrative Expenses. During the three months ended September
30, 2000, general and administrative expenses were $395,103 and $126,150,
respectively. General and administrative expenses for the nine months ended
September 30, 2000 and 1999, were $3,304,691 and $2,109,892, respectively.
General and administrative expenses for the nine months period ended
September 30, 2000 and 1999, of approximately $2,800,000 and $1,600,000,
respectively, primarily consist of common stock issued for consulting services
as compensation for providing investor relations, locating funding sources,
legal expenses, acquisition efforts, and other services needed to develop
Monogram into a viable company. The shares were issued at fair market value.
Other Income. Other Income of $400,000 represents cash received as a result
of a settlement agreement dated June 20, 2000, with the Company, Interstate
Management Services, Inc. (IMSC) and Employer Resource (ER). ER agreed to
pay $400,000 to the Company as a settlement agreement for the rights to IMSC.
IMSC was a Professional Employment Organization which ER claimed had been
performing payroll services for IMSC clients. IMSC denied ER's claims to
these rights. The Company purchased IMSC on March 14, 2000.
Provision for Income Taxes. As of September 30, 2000, the Company's
accumulated deficit was approximately $16,900,000. Accordingly, the Company
has recorded a full valuation allowance against any income tax benefit to date.
6
<PAGE>
(2) Liquidity
Nine months ended September 30, 2000 versus 1999
------------------------------------------------
During the nine months ended September 30, 2000 and 1999, Monogram received
total cash capital contributions of approximately $166,000 and $29,000,
respectively. Monogram also received related party advances of approximately
$18,000 and $64,000 for the nine months ended September 30, 2000 and 1999,
respectively, to help fund working capital operations. Repayments on related
party loans totaling $45,000 were made during the nine months ended
September 30, 2000. Related party loans of approximately $80,000 were
converted to capital contributions during the nine months ended September
30, 2000.
Due to the "start-up" nature of the Company's business, the Company expects
to incur losses as it expands its business. The Company has been dependent
upon funds advanced from stockholders to support its working capital needs.
The Company may raise additional funds through public or private equity
investments in order to expand the range and scope of its business
operations, but there is no assurance that such additional funds will be
available for the Company to finance its operations on acceptable terms, if
at all.
The Company has recently redirected its business efforts back into the film
industry and is focusing on the distribution of its film library. The recent
acquisition of the film library of Media Classics Group, Inc. (MGI) by
Monogram has brought a new light to corporate profits. Monogram is currently
in negotiations with several different companies for the distribution of its
film library and anticipates significant revenues to be generated within
the next six months. Colleen Meeker has been retained as vice-president of
foreign sales. Monogram has opened an office in Minneapolis, Minnesota under
the direction of Steven Gallagher, vice-president of domestic sales.
The PEO business will be operated as a separate division and will grow
internally as opposed to acquiring additional PEO's. On March 14, 2000,
Monogram acquired 75% of Interstate Management Services Company (IMSC) and
issued 750,000 shares of Monogram common stock. The acquisition went sour
and both companies have decided to go their separate ways. The operations of
IMSC have not been included in Monogram's Statement of Operations for the
three and nine months ended September 30, 2000. As part of the acquisition,
$160,000 cash was received by Monogram, which has been treated as a capital
contribution. Originally, Monogram was awaiting the audited financial
statements of IMSC so it could record the acquisition of IMSC at net book
value. However, since the acquisition has been rescinded but the shares
issued not canceled, Monogram has valued the shares issued at the fair
market value of the common stock on the date of issuance, less a discount
for nontradeability due to its restricted status.
7
<PAGE>
PART II
Item 1. Legal Proceedings.
--------------------------
None.
Item 2. Changes in Securities.
-------------------------------
As detailed in the financial statements, the Company issued 9,482,998 shares of
its common stock during the nine months ended September 30, 2000, as follows:
1. 140,000 shares of common stock for services at $0.15 per share, or
$21,000.
2. 1,000,000 shares of common stock for services at $0.63 per share, or
$630,000.
3. 750,000 shares of common stock issued for 75% in acquisition of subsidiary
at $0.34 per share, or $255,000. (See md&a)
4. 250,000 shares of common stock for services at $0.23 per share, or
$57,400.
5. 199,998 shares of common stock for services at $0.24 per share, or
$48,090.
6. 4,468,000 shares of common stock for services at $0.22 per share, or
$977,375.
7. 400,000 shares of common stock issued for 100% acquisition of subsidiary
at net book value of subsidiary, or $17,176.
8. 975,000 shares of common stock for services at $0.16 per share, or
$159,705.
9. 1,300,000 shares of common stock for services at $0.47 per share, or
$611,000.
Item 3. Defaults Upon Senior Securities.
----------------------------------------
None.
Item 4. Submission of Matters to Vote of Security Holders.
-----------------------------------------------------------
None.
Item 5. Other Information.
---------------------------
None.
Item 6. Exhibits and Reports on Form 8-K.
------------------------------------------
(1) On May 11, 2000, we filed a Form 8-K to change our name to e Personnel
Management.com
(2) On May 22, 2000, we filed a Form 8-K for the sale of our film library
to Media Classics, Inc., a related party.
(3) On May 22, 2000, we filed a Form 8-K for the acquisition of Interstate
Management Services Company.
(4) On September 22, 2000, we filed a Form 8-K to change our name to Monogram
Pictures, Inc.
Exhibit 27. Financial Data Schedule
8
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
Monogram Pictures, Inc.
By:/s/ Donna Anderson
President and Chief Executive Officer
Dated: November 29, 2000
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on
the dates indicated.
9
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