<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission File Number 000-24755
HOLLYWOOD PARTNERS.COM, INC.
Exact name of Registrant as specified in its charter)
DELAWARE 33-0379106
(State or other Jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1800 Avenue of the Stars, Suite 480, Los Angeles, CA 90067
(Address of principal executive offices)
(Zip Code)
(310) 552-0555
(Registrant's telephone number, including area code)
Check whether the issuer (1) has filed all reports required to be filed by
section 13 or 15(d) of the Exchange Act of 1934 during the preceding twelve
months ended December 31, 1998 (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 ninety days.
Yes: X No:
The number of shares of the Registrant's Common Stock, par value $.001 per
share outstanding on February 14, 2000 is 8,000,000.
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HOLLYWOOD PARTNERS.COM, INC.
CONTENTS
PART 1 - FINANCIAL INFORMATION
_______________________________________________________________________
ITEM 1.
Consolidated Financial Statements:
Balance Sheets - September 30, 1999 and December 31, 1998 .... 3-4
Statements of Operations
Three Month Periods Ended September 30, 1999 and 1998. . 5
Nine Month Periods Ended September 30, 1999 and 1998 . 6
Statement of Stockholders' Equity (Deficit)
Nine Month Period Ended September 30, 1999 . 7
Statements of Cash Flows
Nine Month Periods Ended September 30, 1999 and 1998 . 8
Notes to the Financial Statements . 9-10
ITEM 2.
Management's Discussion and Analysis of Financial Condition
and Results of Operations.................. 11-13
PART II - OTHER INFORMATION
ITEM 2.
Changes in Securities and Use of Proceeds ........... 14
ITEM 5. Other Information ..................... 14
ITEM 6. Exhibits and Reports on Form 8-K ............... 15
Signature........................ 16
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HOLLYWOOD PARTNERS.COM, INC.
CONSOLIDATED BALANCE SHEET
September 30, 1999 and December 31, 1998
ASSETS
September 30, 1999
December 31, (Unaudited) 1998
Current assets
Cash and cash equivalents $ 427,035 $ 243,834
Accounts receivable, less allowance
for doubtful accounts of $61,803 $21,472
208,016 819,856
Inventories 258,162 94,932
Prepaid expenses and other current assets 108,120 111,813
Total Current Assets 1,001,334 1,270,435
Equipment
Computer equipment 4,804 -
4,804
Less accumulated depreciation
-
-
Total Equipment
4,804
-
Total Assets $ 1,006,138 $ 1,270,435
See accompanying notes to consolidated financial statements
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HOLLYWOOD PARTNERS.COM, INC.
CONSOLIDATED BALANCE SHEET
September 30, 1999 and December 31, 1998
LIABILITIES AND STOCKHOLDERS' EQUITY
September 30, 1999 December 31, 1998
(Unaudited)
Current liabilities
Loan from related parties $272,343 $953,301
Convertible notes payable 375,000 -
Accounts payable 117,256 252,668
Accrued expenses 90,652 66,127
Total Current Liabilities 855,252 1,272,096
Stockholders' equity (deficit)
Common stock, $.001 par value; authorized 50,000,000
shares; issued and outstanding 8,000,000 shares
8,000 8,000
Additional paid-in capital 500,000 -
Accumulated deficit (357,114) (9,661)
Total Stockholders' Equity (Deficit)
150,886 (1,661)
Total Liabilities & Stockholders' Equity
$1,006,138 $1,270,435
See accompanying notes to consolidated financial statements
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HOLLYWOOD PARTNERS.COM, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
September 30, 1999 1998
Net revenues $ 279,446 $ 553,944
Cost of sales 99,130 286,877
Gross profit 180,316 267,067
Operating expenses
Research and development 7,594 81,772
Sales and marketing 182,172 193,557
General and administrative 86,313 13,228
Total operating expenses 276,079 288,557
Loss from operations (95,763) (21,490)
Other income - 4,502
Total other income - 4,502
Net loss $ (95,763) $ (16,988)
Basic and diluted net loss per common share
$ (0.01) $ (0.002)
Basic and diluted weighted average shares of common stock
8,000,000 8,000,000
See accompanying notes to consolidated financial statements
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HOLLYWOOD PARTNERS.COM, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Nine Months Ended
September 30, 1999 1998
Net revenues $ 1,019,155 $ 708,587
Cost of sales 600,667 398,482
Gross profit 418,488 310,105
Operating expenses
Research and development
12,489 208,291
Sales and marketing 568,965 256,725
General and administrative
269,404 63,125
Total operating expenses
850,858 528,141
Loss from operations
(432,370) (218,037)
Other income
Other income - 5,731
Interest income 476 -
Total other income 476 5,731
Loss before extraordinary item
(431,894) (212,305)
Extraordinary item - forgiveness of debt
84,441 -
Net Loss (347,453) (212,305)
Basic and diluted net loss per common share:
Loss before extraordinary item
$ (0.05) $ (0.03)
Extraordinary gain on extinguishment of debt
0.01 -
Net loss (0.04) (0.03)
Basic and diluted weighted average shares of common stock
8,000,000 8,000,000
See accompanying notes to consolidated financial statements
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Hollywood Partners.com, Inc.
Consolidated Statements of Stockholders' Equity
Nine Months Ended September 30, 1999
(Unaudited)
Additional
Common Stock Paid-In Accumulated Total
Shares Amount Capitial Deficit
Balance, January 1, 1999 8,000,000 $8,000 $ - $ (9,661) $ ( 1661)
Proceeds from additional
paid-in capital 500,000 500,000
Net Loss (347,453) (347,453)
Balance, Sep 30, 1999 8,000,000 $8,000 $500,000 $357,114 $ 150,886
See accompanying notes to consolidated financial statements.
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HOLLYWOOD PARTNERS.COM, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended September 30, 1999 1998
Increase (Decrease) in Cash and Cash Equivalents
Cash flows from operating activities:
Net loss $ (347,453) $ (212,305)
Changes in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable 611,840 (141,272)
Inventories (163,231) (236,687)
Prepaid expenses and other current assets
3,693 (74,419)
Loan from related parties (680,958) 411,822
Accounts payable (135,412) 239,219
Accrued expenses 24,526 7,128
Cash and cash equivalents used in operating activities
(686,994) (6,514)
Cash flows from investing activities:
Purchase of computer equipment (4,804) -
Cash and cash equivalents used in investing activities
(4,804)
Cash flows from financing activities:
Proceeds from shareholder contribution
500,000 -
Proceeds from convertible notes payable, short term
375,000 -
Cash and cash equivalents provided by financing activities
875,000 -
Increase (decrease) in cash and cash equivalents
183,202 (6,514)
Cash and cash equivalents, beginning of period
243,834 -
Cash and cash equivalents, end of period
$ 427,036 $ (6,514)
Supplemental disclosure of cash flow information
Cash paid during the period for:
Interest - -
Income taxes - -
Supplemental disclosure of non-cash operating, investing, and
financing activities
6 to 1 forward split of common stock
$7,500
See accompanying notes to consolidated financial statements
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HOLLYWOOD PARTNERS.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - GENERAL
The unaudited consolidated financial statements have been prepared on the same
basis as the audited consolidated financial statements and, in the opinion of
management, reflect all adjustments (consisting of normal recurring adjustments)
necessary for a fair presentation for each of the periods presented. The
financial statements include the results of Hollywood Partners, Inc., a wholly
owned subsidiary of Hollywood Partners.com, Inc. In Addition, all significant
intercompany accounts have been eliminated. The results of operations for
interim periods are not necessarily indicative of results to be achieved
for full fiscal years.
As contemplated by the Securities and Exchange Commission (SEC) under item
310(b) of Regulation S-B, the accompanying consolidated financial statements
and related footnotes do not contain certain information that will be included
in the Company's annual consolidated financial statements and footnotes
thereto.
The Company is presently engaged in developing an online sweepstakes,
marketing and promotions Web site on the Internet. The Company also licenses
intellectual properties from third parties and develops branded food and
confection products.
Effective September 13, 1999, the Company acquired all the issued and
outstanding shares of Hollywood Partners, Inc. that previously operated as a
wholly-owned subsidiary of Vitafort International Corporation. The Company
acquired 5,000,000 shares of its common stock in connection with this
acquisition and changed its name to Hollywood Partners.com, Inc.
Previous to the acquisition, the Company had 3,000,000 shares of common stock
outstanding and had only nominal operations.
The accompanying financial statements have been prepared on the basis
that Hollywood Partners, Inc. has been the acquirer for accounting
purposes for the entire reporting periods.
NOTE 2 - INVENTORIES
Inventories are stated at the lower of cost (first in, first out) or market.
Inventory consists of the following:
September 30, 1999 December 31, 1998
Finished goods $ 236,967 $ 43,242
Packaging and raw material ___21,195 51,690
$ 258,162 $ 94,932
NOTE 3 - STOCKHOLDERS' EQUITY
The Company undertook a 6 to 1 forward split of its issued outstanding
common stock to increase its authorized share capital to 50,000,000 shares of
common stock, par value $.001. The number of common shares issued was
increased from 500,000 to 3,000,000. Under the terms of its Share Exchange and
Reorganization Agreement discussed in Note 1, the Company issued 5,000,000
shares of common stock.
NOTE 4 - LITIGATION
The Company is not subject to any pending claims or litigation.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
(Unaudited)
Cautionary Statement for Purposes of "Safe Harbor Provisions" of the Private
Securities Litigation Reform Act of 1995:
Except for historical facts, all matters discussed in this report which are
forward looking involve a high degree of risks and uncertainties. Potential
risks and uncertainties include, but are not limited to, competitive pressures
from other food companies and within the grocery industry, economic conditions
in the Company's primary markets and other uncertainties detailed from time to
time in the Company's Securities and Exchange Commission filings.
Three Months and Nine Months Ended September 30, 1999 and 1998
Results of Operations:
In the third quarter, management targeted four critical areas to focus the
Company's resources. The first initiative was to further develop the food
broker infrastructure that would maintain the Company's current distribution
and provide support and momentum for the reintroduction of "The Wizard of Oz"
line with its new packaging, featuring different characters for each flavors,
and the introduction of the white marshmallows. At the beginning of the
quarter, the broker coverage for Hollywood Partners products was less than 35%.
With the appointment of Crossmark Sales and Marketing in 12 Midwest markets,
the Company increased its broker representation to over 85% of U.S. markets.
The Company's product development initiative also included the redesign of the
packaging of "The Wizard of Oz" line of marshmallow snacks. The product line
that had generated a significant percentage of the Company's sales over the
previous two quarters lost momentum the previous quarter due to delays in the
change of packaging and delays in the introduction of a new white marshmallow.
This strategic redesign was implemented to create uniqueness among each of the
five flavors (featuring a different character on each package) and to conform
with Warner Bros. style guide, which was not available when the Company first
introduced this product line. The initial response to both the new package
design and the white marshmallow has been very positive as the Company
shipped initial orders to Albertsons and Save-Mart during August.
Logistical inefficiencies were also addressed in the second quarter as the
Company changed the location of its principal public warehouse from Laredo, TX
to Quincy, IL. This location is centrally located to the Company's three major
manufacturing facilities and is also centrally located to its customers
throughout the country. Management believes that changing the location of the
Company's warehouse will enable it to give better service to its customers and
to achieve certain shipping efficiencies.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
(Unaudited)
Net Revenues
For the three months ended September 30, 1999, net sales were $279,446 compared
to $553,944 for the same period in 1998, a decrease of $274,498, or
approximately 50%. This decrease in revenue was due to the redesign of the
packaging of "The Wizard of Oz" line of marshmallows to conform with the
Licensor new style guide. Orders were held by customers awaiting the
introduction of the new packaging.
For the nine months ended September 30, 1999, net sales were $1,019,155
compared to $708,587 for the same period in 1998, an increase of $310,568 or
43%. This was due primarily to sales of "The Wizard of Oz" line of products.
Gross Profit
Gross profit decreased from $267,067 for the three months ended September 30,
1998 to $180,316 for the three months ended September 30, 1999, a decrease of
$86,751 or 32%. Gross profit was 64.5% of net revenues for the quarter ended
September 30, 1999, compared to 48.2% for the same period of 1998.
Part of this increase is due to free merchandise given to the Company by the
manufacturer in lieu of product shipped in the prior quarter that did not meet
the quality assurance standards of the Company.
Gross profit increased from $310,105 for the nine months ended September 30,
1998 to $418,488 for the nine months ended September 30, 1999, an increase of
$108,383 or 35%. The increase is due to the favorable mix of
"The Wizard of Oz" products sold at much higher profit margins.
Operating Expenses
Research and Development - Total expenses for product development in the three
months ended September 30, 1999 were $7,594 compared to $81,772 for the same
period in 1998, a decrease of $74,178. This is in line with the Company's
on-going strategy to source from existing manufacturers and use their internal
research and technical staff to develop the new products.
Research and Development - Total expenses for product development in the nine
months ended September 30, 1999 were $12,489 compared to $208,291 for the same
period in 1998, a decrease of $195,802.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
(Unaudited)
Sales and Marketing
Total sales and marketing expenses for the three months ended September 30,
1999 were $182,172 compared to $193,557 for the three months ended September 30,
1998, a decrease of $11,305. This decrease in expenses was primarily due to
lower sales promotion costs.
Total sales and marketing expenses for the nine months ended September 30,
1999 were $568,965 compared to $256,725 for the nine months ended September 30,
1998, an increase of $312,240. This was due to higher slotting costs paid to
new customers, increase in freight out expenses and the cost of additional
sales consultants.
General and Administrative
For the three months ended September 30, 1999, total general and administrative
expenses were $86,313 compared to $13,228 for the same quarter ended
September 30, 1998, an increase of $73,085.
For the nine months ended September 30, 1999, total general and administrative
expenses were $269,404 compared to $63,125 for the same period ended September
30, 1998, an increase of $206,279 . The increase of administrative expenses in
1999 were caused by management's decision to establish a fully integrated
organization to sustain the planned growth of the Company and to support a
change in business focus to transition the Company to an Internet marketing and
promotions company (See Item 5 - Other Information).
Liquidity and Capital Resources
Nine Months Ended
September 30, 1999 1998
Net Cash Used for Operations $ (686,995) $ (6,514)
Net Cash Provided by Financing Activities 875,000 -
Net Cash (Used in) Investing Activities (4,804) -
Working Capital (Deficit) 146,082 (1,661)
The Company is increasing spending levels to allow for the transition of focus
from the prior business of formulating, marketing and distributing food
products to a new business strategy to develop a marketing and promotions Web
site on the Internet (See Item 5 - Other Information). The Company received a
$2 million funding commitment to support this change in focus and to allow for
increased expenditures. As of September 30, 1999, $500,000 of this commitment
was received, and as of November 12, 1999, all $2 million of this commitment
was received. Due to this transition of focus and the requirements to initiate
and grow the new business strategy, the Company expects to incur operating
losses for the foreseeable future and requirements for additional
financing.
The Company continues to expend resources in the product development area for
the scheduled introduction of new products. However, there is no guarantee that
these products, once introduced in the market, will achieve the anticipated
level of sales forecast by the Company nor reach the gross profit margin
targeted by the Company for each of the products.
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PART II - OTHER INFORMATION
ITEM 2 - Changes in Securities and Use of Proceeds
Effective September 13, 1999, pursuant to a Share Exchange and Reorganization
Agreement, the Company acquired all of the issued and outstanding shares of
Hollywood Partners, Inc., a California corporation ("Operating Company")
that previously operated as a wholly-owned subsidiary of Vitafort International
Corporation, a publicly traded Delaware corporation ("Vitafort").
In consideration of the shares of Operating Company, the Company issued an
aggregate of 5,000,000 shares of its common stock to Vitafort. Operating
Company is now a wholly owned subsidiary of Company and Vitafort is the
majority stockholder of Company, holding 62.5% of Company's issued and
outstanding common stock. The shares were issued pursuant to the exemption
from registration provided by Section 4(2) of the Securities Act of 1933.
ITEM 5 - Other Information.
Effective September 13, 1999, pursuant to a Share Exchange and Reorganization
Agreement, the Company acquired all of the issued and outstanding shares of
Hollywood Partners, Inc., a California corporation ("Operating Company") that
previously operated as a wholly-owned subsidiary of Vitafort International
Corporation, a publicly traded Delaware corporation ("Vitafort"). In
consideration of the shares of Operating Company, the Company issued an
aggregate of 5,000,000 shares of its common stock to Vitafort.
Operating Company is now a wholly owned subsidiary of Company and Vitafort
is the majority stockholder of Company, holding 62.5% of Company's issued and
outstanding common stock. In connection with the transaction, the Company also
changed its name to "Hollywood Partners.com, Inc."
The Company is implementing a new strategy to create an online sweepstakes,
direct marketing and promotions capabilities to leverage the Company's current
relationships in both the food and entertainment industries. This strategy
will co-brand Hollywood Partners.com sweepstakes and services with other
companies and their products or services, and offer opportunities for the
Company to promote its own products. The HollywoodPartners.com initial Web site,
launched at the end of September, features sweepstakes and promotions that
consumers may enter to win prizes such as shopping sprees, gift certificates
and other goods and services. The Company plans significant enhancements to
the HollywoodPartners.com and associated Web sites during the first two
quarters of year 2000. In addition, the Company will continue to develop
and market licensed snack foods, utilizing these products to promote
sweepstakes opportunities on the Company's Web site.
Effective October 1, 1999, the Company changed its business model to phase out
its food manufacturing and distribution activities. The Company entered into a
master manufacturing and distribution agreement with Vitafort which provides
for Vitafort to oversee contract manufacturing, and to market and distribute
all existing Company food products in exchange for a royalty based upon net
product sales. Inventories will be sold to Vitafort as this transition of the
business model is implemented.
The Company will continue to develop licensed food products on a limited
basis, and intends to enter into similar master manufacturing and distribution
arrangements, which may or may not be made with Vitafort.
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On October 12, 1999, the Company repaid a convertible note in the amount of
$375,000 plus accrued interest of $6,513.
ITEM 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
2.0 Share Exchange Agreement and Plan of Reorganization
(incorporated by reference to exhibit 2.0 to the Company's
current report on Form 8-K filed September 28, 1999, FILE NO.
000-24755).
3.0 Restated and Amended Certificate of Incorporation (incorporated
by reference to exhibit 3.0 to the Company's current report on
Form 8-K filed September 28, 1999, FILE NO. 000-24755).
(b) Reports on Form 8-K
The Company filed a report on Form 8-K on September 28, 1999. The
Company reported Items 1, 2, 5 and 7 with respect to the acquisition
described above under Item 5. The current report on Form 8-K included
the following financial statements:
(1) Financial Statements of Business Acquired
The financial statements of Hollywood Partners, Inc., a
California corporation for the years ended December 31, 1998
and 1997 and for the six months ended June 30, 1999 and 1998
(unaudited).
(2) Pro Forma Financial Information
Certain pro forma financial information relating to Hollywood
Partners.com, Inc. a Delaware corporation and giving effect to
the transactions described in the Current Report.
HOLLYWOOD PARTNERS.COM, INC.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly
authorized.
HOLLYWOOD PARTNERS.COM, INC.
(Company)
/s/ Lee M. Lambert
Lee M. Lambert
Chief Executive Officer
/s/ Fred Rigaud
Fred Rigaud
Acting Chief Financial Officer
Date: February 14, 2000
