UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB/A
AMENDMENT NO. 1
GENERAL FORM FOR REGISTRATION OF
SECURITIES OF SMALL BUSINESS ISSUERS
UNDER SECTION 12(B) OR (G) OF THE SECURITIES EXCHANGE ACT OF 1934
PHOENIX MEDIA GROUP, LTD.
--------------------------
(Name of Small Business Issuer in its charter)
NEVADA 33-0714007
- -------------------------------- -----------------------
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
290 EAST VERDUGO, SUITE 207, BURBANK, CALIFORNIA 91502
-------------------------------------------------------
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (818) 563-3900
--------------
Securities to be registered under Section 12(b) of the Exchange Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
None None
Securities to be registered under Section 12(g) of the Exchange Act:
COMMON STOCK, $0.001 PAR VALUE
------------------------------
(Title of class)
CONVERTIBLE PREFERRED SERIES A, $0.01 PAR VALUE
-----------------------------------------------
(Title of class)
<PAGE>
TABLE OF CONTENTS
ITEM NUMBER AND CAPTION PAGE
PART I
Item 1. Description of Business............................................ 3
Item 2. Management's Discussion and Analysis or Plan of Operations......... 5
Item 3. Description of Property............................................ 9
Item 4. Security Ownership of Certain Beneficial Owners and Management..... 9
Item 5. Directors, Executive Officers, Promoters and Control Persons;......10
Item 6. Executive Compensation.............................................11
Item 7. Certain Relationships and Related Transactions.....................11
Item 8. Description of Securities..........................................12
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity
and Other Shareholder Matters..............................13
Item 2. Legal Proceedings..................................................14
Item 3. Changes in and Disagreements With Accountants......................14
Item 4. Recent Sales of Unregistered Securities............................14
Item 5. Indemnification of Directors and Officers..........................14.
Part F/S Financial Statements...............................................15
PART III
Item 1. Index to Exhibits..................................................16
Item 2. Description of Exhibits............................................16
2
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
Phoenix Media Group, Ltd. (the "Company") was organized under the laws
of the State of Utah on December 5, 1985 as Bullseye Corp., a blind pool. The
Company was formed for the purpose of raising capital to be used to investigate
and acquire interests in products and businesses which were perceived to have a
potential for profit. On June 22, 1992, the name of the Company was changed to
Natural Solutions, Ltd. and the corporate domicile was changed to the State of
Nevada. Natural Solutions, Ltd. planned to be in the medical field but was
ultimately unsuccessful in commencing operations or generating any revenues.
Subsequently, the Company's name was changed to High Seas Entertainment, Inc.,
which proposed venture was also unsuccessful.
On March 25, 1994, the Company name was changed to Phoenix Media Group,
Ltd. The Company initially commenced operations in the production of radio and
television infomercials and is now expanding into the field of commercial
cartoon character development, merchandising and licensing. The Company was in
the development stage through June 30, 1994. The fiscal year ended June 30, 1995
year is the first year during which the Company is considered an operating
company.
The Company's objective is to become a major player in the
communications industry with an emphasis on radio, television and Internet
services. As part of its business plan, the Company is voluntarily filing this
registration statement on Form 10-SB in order to become subject to the reporting
requirements of the Securities Exchange Act of 1934 and to enable the Company's
common stock to continue to be traded on the OTC Electronic Bulletin Board. The
Company's common stock trades on the NASD Electronic Bulletin Board under the
symbol "PXMG-BB".
The Company's office is located at 290 East Verdugo, Suite 207,
Burbank, California 91502. The contact person is Ronald Irwin, CEO and the
telephone number is (818) 563-3900. The COMPANY'S WEB SITES ARE
WWW.PHOENIXMEDIAGROUP.COM AND WWW.MANFREDMOOSE.COM.
The Company's principal products are the production of radio and
television infomercials and commercials along with the development, publication,
manufacture, design and sale of books and toys in the image of or otherwise
relating to the character Manfred Moose(TM). The Company's radio and television
infomercials and commercials are solicited directly from a wide variety of
commercial prospects and distributed via electronic media to various radio and
television stations.
Currently, the Company produces radio programs that are broadcast on
four commercial radio stations in San Francisco, Seattle, Portland and
Annapolis. The Company has been involved in producing these programs profitably
for a number of years now. The Company purchases the air time from the radio
stations and then re-sells the air time to the companies that sponsor the
Company's shows in the form of advertising.
3
<PAGE>
During Fiscal Year 1999, the Company announced the development of the
Manfred Moose(TM) Millennium Doll and the book "Manfred Moose(TM) Flies to Hong
Kong." Both products have been completed and are being marketed for sale. The
Company is producing and SELLING MANFRED MOOSE(TM) FLIES TO HONG KONG, a 32 page
full color illustrated book for children ages three to seven. The book is sold
at Amazon.com, Barnes & Noble.com and through the Company's website. The Company
is also plans to market and sell such Manfred Moose(TM) merchandise as alarm
clocks, a putter head cover and a putter.
The Company has an agreement with Air Tahiti Nui to produce a Manfred
Moose(TM) coloring book for distribution on Air Tahiti Nui flights between Los
Angeles, Papeete, Tokyo and Osaka. The coloring book is presently in development
and it is expected to cost the Company approximately $10,000 in development
costs. The first printing is to expected to be for 10,000 copies.
THE COMPANY ALSO HAS AN AGREEMENT WITH AIR TAHITI NUI TO SELL A BOOK,
THE LEGEND OF MOANA MOOSE, through the airline's in-flight store on a duty-free
basis. The book is in development and expected to be published in September,
2000. The Company anticipates selling this book through the above-mentioned
channels, including its own web site. The development cost of this book is
estimated to be approximately $25,000 and the first printing is estimated to be
for 7,500 copies.
At this time, the Company is also in the process of developing a three
and one-half minute animated cartoon. This cartoon will be used to present the
Manfred Moose(TM) character to major television networks and program
syndicators, with the hope of eventually creating a Manfred Moose(TM) cartoon
series, although there can be no assurances that the Company will be successful
in creating or selling such a series or that such a series will ultimately be
successful. The development costs associated with this project are estimated to
be approximately $100,000 with completion of the initial development of the
character in nine to twelve months.
The Company faces significant competition in the field of radio and
television commercials and infomercials. The Company's relative position in the
industry is small and there are many companies with significantly more assets,
expertise and reputation. The competition with regard to the Company's
character, Manfred Moose(TM) is very substantial and dominated by several very
large and well-known competitors, including several major corporations, with
significantly more revenues, assets, reputation and expertise in this field. The
Company's relative position in the industry is very small.
The Company holds a trademark on the name Manfred Moose(TM) and
copyrights on several Manfred Moose(TM) images.
The Company presently has four employees, two of whom work full-time
for the Company.
4
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
FORWARD-LOOKING STATEMENTS MAY NOT PROVE ACCURATE
When used in this Form 10-SB, the words anticipated, estimate, expect, and
similar expressions are intended to identify forward-looking statements. Such
statements are subject to certain risks, uncertainties and assumptions including
the possibility that the Company's will fail to generate projected revenues.
Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially from
those anticipated, estimated or projected.
General
The following discusses the financial position and results of
operations of the Company.
Customers with repeat business accounted for a majority of the revenues
generated. Significantly all of the Company's revenues came from its resale of
air time to its customers. That was the Company's principle service provided
during fiscal 1999. During fiscal 1999, the Company began purchasing air time
from a total of four stations, which is double the number of stations it was
purchasing from during fiscal 1998. Revenues from sales of items associated with
Manfred Moose(TM) were negligible. Although the Company provides service to its
customers with repeat business, there is no assurance that such customers will
maintain or increase the level of volume of business of the Company.
During fiscal 1999, the Company's total assets increased to
approximately $181,000 over approximately $157,000 during fiscal 1998. Part of
this was due to the payment of an outstanding account receivable through the
transfer of $57,750 worth of stock to the Company. For the six month period
ended December 31, 1999, the Company's assets were approximately $134,000. This
difference from fiscal 1999 was due to the Company selling the stock it had
received to pay the Company's liabilities.
RESULTS OF OPERATIONS - The following table set forth, for the years ended June
30, 1999 and 1998, certain items from the Company's Condensed Statements of
Operations expressed as a percentage of net sales.
1999 1998
--------- ---------
Sales, Net ......................................... 100.0% 100.0%
Cost of Sales ...................................... 29.0% 16.1%
--------- ---------
Gross Margin ....................................... 71.0% 83.9%
5
<PAGE>
Operating Expenses ................................ 58.8% 119.3%
--------- ---------
Operating Income (Loss) ........................... 12.2% (35.4)%
Interest Income, Net .............................. (1.5)% (2.8)%
--------- ---------
Income (Loss) Before Income Taxes ................. 10.7% (38.2)%
Income Taxes ...................................... 0.3% 0.5%
--------- ---------
Net Income (Loss) ................................. 10.4% (38.7)%
========= =========
NET SALES
Net sales for Fiscal 1999 compared to Fiscal 1998 increased by
approximately $132,000 or 91.6%. This increase was due to expansion of sales and
marketing efforts as the Company began to purchase and resell air time on four
stations in fiscal 1999 as compared to two stations in fiscal 1998. For the six
month period ended December 31, 1999, revenues were approximately $190,000 as
compared to approximately $140,000 for the six month period ended December 31,
1998 and is also attributable to the Company's increased sales and marketing
efforts.
COST OF SALES
Cost of sales for Fiscal 1999 increased approximately $57,000 or 246.0%
compared to Fiscal 1998. As a percentage of sales, cost of sales increased 12.9%
from 16.1% to 29.0%. This increase was due to the purchase of additional air
time at increased costs as the Company increased from two to four the number of
stations at which it was purchasing air time. For the six month period ended
December 31, 1999, costs of sales as a percentage of sales decreased 11.3% to
17.7%, down from 29.0% for the six month period ended December 31, 1998. This
decrease is attributable to decreases in air time costs during this fiscal
period as compared to the previous year. The Company anticipates that costs of
sales will continue to fluctuate between 15% and 30% depending on the cost it
must pay for air time.
Also, as the Company complete development of the various Manfred
Moose(TM) projects it is currently working on, its cost of sales will be
affected, although the Company cannot predict with any degree of accuracy how
much since, to a large extent, that depends on how successful this new line of
business in for the Company.
OPERATING EXPENSES
Operating expenses during Fiscal 1999 decreased approximately $10,000
or 5.61% compared to Fiscal 1998, from $172,509 to $162,821. As a percentage of
sales, operating expenses decreased
6
<PAGE>
60.5% from 119.3% to 58.8%. This decrease was due to an executive salary
reduction and fixed costs being spread across increased revenues. For the six
month period ended December 31, 1999, operating costs were approximately
$222,000 compared to approximately $81,000 for the six month period ended
December 31, 1998. Most of this increase in operating expenses is attributable
to the Company's efforts with regard to developing Manfred Moose(TM) and related
products to market and sell in the future and includes compensation to officers
and directors as well as actual production costs. It is anticipated that this
trend will continue as the Company continues to develop and seek new
opportunities to license and market Manfred Moose(TM) merchandise. The Company
cannot predict how and when, if ever, it will recoup these operating expenses
until the Company can gauge whether or not this character will be successful
with consumers and as a marketing tool for businesses wishing to license the
character for their use.
LIQUIDITY AND CAPITAL RESOURCES
The Company requires working capital principally to fund its current
operations. Generally, the Company has adequate funds for its activities. There
are no formal commitments from banks or other lending sources for lines of
credit or similar short-term borrowing. It is anticipated that the current
operations will expand and the funds generated will exceed the Company's working
capital requirements for the next year. The Company has long term goals to
further develop Manfred Moose(TM) merchandise and products over the next twelve
month period and expects that the projects it currently has in development will
require approximately $150,000 over the next twelve months. The Company believes
that its operations will be able to provide the funds for these development
costs. The Company anticipates that ultimately, these development costs will be
recouped through the eventual sales of the various products being developed.
For the fiscal year ended June 30, 1999, the Company had $57,750 in
investments held for sale. This consisted of securities transferred to the
Company in satisfaction of an account receivable of the Company. These
securities were sold in the fall of 1999, with the Company incurring a loss of
$32,859 on the transaction. The Company does not anticipate this type of
activity recurring in the future. For the six month period ended December 31,
1999, the Company's assets were reduced by by $57,750 due to the sale of these
securities. This loss and the issuance of stock as compensation are major
reasons why the Company reflects a loss before taxes of approximately $99,000
for the six month period ended December 31, 1999 compared to a net profit before
taxes of approximately $15,000 for the six month period ending December 31,
1998.
For the six month period ended December 31, 1999, the Company's asset
value of vehicles rose to $34,173 compared to $15,200 for the six month period
ended December 31, 1998. This increase is attributable to the purchase of a Ford
Taurus for use by the Company's CEO.
The Company generates and uses cash flows through three activities:
operating, investing, and financing. During 1999, operating activities used cash
of approximately $4,000 as compared to net cash used of approximately $7,000 for
1998. For the six month period ended December 31, 1999, the Company's operating
activities used cash of approximately $19,000 while for the six
7
<PAGE>
month period ended December 31, 1998, the Company's operating activities used
approximately $2,000. Much of this increase in attributable to the Company's
development and marketing of Manfred Moose(TM).
Cash flows used by investing activities is primarily due to the
acquisition of approximately $5,000 of computer equipment and office furniture
for 1999. During 1998 investing activities provided approximately $27,000, from
shareholder loans and notes receivable and used approximately $15,000 for the
purchase of property and equipment.
Financing activities used less than $1,000 in principal payments on
debt for 1999 and 1998. During 1998 financing activities provided $5,000 in
proceeds from capital stock issued.
Management believes that the Company's current cash and funds available
will be sufficient to meet capital requirements and short term and long term
working capital needs in the fiscal year ending June 31, 2000 and beyond, unless
a significant acquisition or expansion is undertaken. The Company is constantly
searching for potential acquisitions and/or expansion opportunities. However,
there are no arrangements or ongoing negotiations for any acquisition or
expansion.
RECENT DEVELOPMENTS
The Company continues to pursue its efforts in marketing and licensing
Manfred Moose(TM) and is working to complete the projects with Air Tahiti
described above. Efforts to work on a cartoon series are still progressing. The
Company entered into an agreement with a major shareholder whereby that
shareholder invested $50,000 in early 2000 to help fund the development costs
incurred by the Company in creating and marketing Manfred Moose(TM).
Inflation and Regulation
The Company's operations have not been, and in the near term are not
expected to be, materially affected by inflation or changing prices. The Company
encounters competition from a variety of Companies in its markets. Many of these
companies have long standing customer relationships and are well-staffed and
well financed. The Company believes that competition in the its industries is
based on customer satisfaction and production of quality products and services,
although the ability, reputation and support of management is also significant.
The Company does not believe that any recently enacted or presently pending
proposed legislation will have a material adverse effect on its results of
operations.
Factors That May Affect Future Results
Management's Discussion and Analysis and other parts of this
registration statement contain information based on management's beliefs and
forward-looking statements that involve a number of risks, uncertainties, and
assumptions. There can be no assurance that actual results will not differ
8
<PAGE>
materially for the forward-looking statements as a result of various factors,
including but not limited to the following:
The markets for many of the Company's offerings are characterized by
rapidly changing technology, evolving industry standards, and frequent new
product introductions. The Company's operating results will depend to a
significant extent on its ability to design, develop, or otherwise obtain and
introduce new products, services, systems, and solutions and to reduce the costs
of these offerings. The success of these and other new offerings is dependent on
many factors, including proper identification of customer needs, cost, timely
completion and introduction, differentiation from offerings of the Company's
competitors, and market acceptance. The ability to successfully introduce new
products and services could have an impact on future results of operations.
ITEM 3. DESCRIPTION OF PROPERTY.
The Company maintains an office condominium at 290 East Verdugo Avenue,
Suite 207, Burbank California. The property was purchased for $75,000 and is
being amortized over 39 years. The property is subject to a first mortgage with
monthly payment of $393.36 over 30 years at 8.75%.
In the opinion of management, all properties owned by the Company are
adequately insured.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
(a) Security ownership of certain beneficial owners.
The following table sets forth the number and percentage of the
Company's common shares owned of record and beneficially by each person owning
more than 5% of such common shares, and the shares beneficially owned by all
directors, executive officers and nominees: at December 31, 1999.
(1) (2) (3) (4)
Name and Amount and
Address of Nature of
Title of Beneficial Beneficial Percent of
Class Owner Owner Class
- -------------------------------------------------------------------------------
Common Stock Bristol Investments Limited 500,000 7.27%
1601 Kinwick Centre
32 Hollywood Road
Central Hong Kong
Zhong Hong Li
9
<PAGE>
(1) (2) (3) (4)
Name and Amount and
Address of Nature of
Title of Beneficial Beneficial Percent of
Class Owner Owner Class
- -------------------------------------------------------------------------------
Directors & Executives
Ronald R. Irwin, CEO & Director 3,500,000 50.87%
290 E. Verdugo Ave.
Burbank, CA 91502
Richard Spangler, President & 100,000 1.45%
Director
290 E. Verdugo Ave.
Burbank, CA 91502
David Petrik, Director 25,000 0.36%
290 E. Verdugo Ave.
Burbank, CA 91502
Wayne K. Smith, Sec/Treas. 68,000 0.99%
290 E. Verdugo Ave.
Burbank, CA 91502
Directors and executive 3,693,000 53.67%
officers as a Group
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
Directors and Executive Officers.
(1) (2) (3)
NAME and AGE POSITION TERM OF OFFICE
Ronald R. Irwin 54 C.E.O. and Chairman Until next meeting
10
<PAGE>
(1) (2) (3)
NAME and AGE POSITION TERM OF OFFICE
Richard Spangler 65 President & Director Until next meeting
David Petrik 52 Director Until next meeting
Wayne Smith 45 Secretary/Treasurer Until next meeting
Ronald R. Irwin - During the past 5 years, Mr. Irwin has been engaged full
time as Chairman and C.E.O. for the Company.
Richard - Spangler - During the past 5 years, Mr. Spangler has served full time
as President and Director for the Company.
David Petrik - During the past 5 years, Mr. Petrik has served as Director and
Chief Engineer for the Company. Prior to his employment with the
Company, he worked as a Radio Engineer for KROQ Radio in Los Angeles,
CA, and the Premier Radio Network in Los Angeles, Ca.
Wayne Smith - During the past 5 years has served as Secretary/Treasurer for
the Company. During this same period of time, he has also worked for
Trans World Airlines, Inc. in a non-executive position.
ITEM 6. EXECUTIVE COMPENSATION.
No executive received in excess of $100,000 compensation during the
past three years.
Ronald R. Irwin, C.E.O. and Chairman received compensation of
approximately $60,000 per year during the past three years.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
During 1997, the Company loaned Ronald Irwin, its CEO and director,
$20,100, interest at 1%, repayable at $201 per month for ten months with a
balloon payment due in 2007. In addition, Wayne Smith, Secretary and Treasurer
of the Company, advanced $8,000 at 0% interest, to the Company.
In September, 1999, the Company authorized the issuance of 100,000
shares of its common stock, valued at $20,000, to Mr. Irwin, CEO and 30,000
shares of its common stock, valued at $6,000, to Mr. Smith, Secretary and
Treasurer, as compensation for their work in conceiving and developing the
Manfred Moose(TM) concept. An additional 10,000 shares valued at $2,000 was
issued to the artist responsible for illustrating Manfred Moose(TM) as a bonus
for his excellent work. An
11
<PAGE>
additional 20,000 shares valued at $4,000 was issued to an outside consultant
who has performed numerous services for the Company over the years.
ITEM 8. DESCRIPTION OF SECURITIES.
The Company's Articles of Incorporation authorize the issuance of
50,000,000 shares of Common Stock, par value $.001. The Company presently has
6,880,649 shares of its common stock issued and outstanding. Each record holder
of Common Stock is entitled to one vote for each share held in all matters
properly submitted to the stockholders for their vote. Cumulative voting for the
election of directors is not permitted by the Amended Articles of Incorporation.
Holders of outstanding shares of Common Stock are entitled to such
dividends as may be declared from time to time by the Board of Directors out of
legally available funds; and, in the event of liquidation, dissolution or
winding up of the affairs of the Company, holders are entitled to receive,
ratably, the net assets of the Company available to stockholders after
distribution is made to the preferred stockholders, if any, who are given
preferred rights upon liquidation. Holders of outstanding shares of Common Stock
have no preemptive, conversion or redemptive rights. All of the issued and
outstanding shares of Common Stock are, and all unissued shares when offered and
sold will be, duly authorized, validly issued, fully paid, and nonassessable. To
the extent that additional shares of the Company's Common Stock are issued, the
relative interests of then existing stockholders may be diluted.
PREFERRED STOCK
The Company's Articles of Incorporation authorize the issuance of
5,000,000 shares of Series A Convertible preferred stock, par value $.01. The
Board of Directors of the Company is authorized to issue the preferred stock
from time to time in series and is further authorized to establish such series,
to fix and determine the variations in the relative rights and preferences as
between series, to fix voting rights, if any, for each series, and to allow for
the conversion of preferred stock into Common Stock. No preferred stock has been
issued by the Company. The Company anticipates that preferred stock may be
utilized in making acquisitions.
REPORTS TO STOCKHOLDERS
The Company plans to furnish its stockholders with an annual report for
each fiscal year containing financial statements audited by its independent
certified public accountants. In the event the Company enters into a business
combination with another company, it is the present intention of management to
continue furnishing annual reports to stockholders. Additionally, the Company
may, in its sole discretion, issue unaudited quarterly or other interim reports
to its stockholders when it deems appropriate. The Company intends to comply
with the periodic reporting requirements of the Securities Exchange Act of 1994
for so long as it is subject to those requirements.
12
<PAGE>
PART II
ITEM 1. MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS.
The stock is traded over-the-counter with the trading symbol "PXMG".
The following high and low bid information was provided by PC Financial Network.
The quotations provided reflect inter-dealer prices, without retail mark-up,
mark-down or commission and may not represent actual transactions.
1997 HIGH BID LOW BID
First Quarter (09/30/97) $0.188 $0.125
Second Quarter (12/31/97) $0.125 $0.050
Third Quarter (03/31/98) $0.100 $0.040
Fourth Quarter (06/30/98) $0.340 $0.050
1998
First Quarter (09/30/98) $0.180 $0.125
Second Quarter (12/31/98) $0.150 $0.080
Third Quarter (03/31/99) $0.120 $0.080
Fourth Quarter (06/30/99) $0.125 $0.063
1999
First Quarter (09/30/99) $0.313 $0.060
Second Quarter (12/31/99) $0.220 $0.130
The number of shareholders of record of the Company's common stock as
of September 3, 1999 was approximately 800.
The Company has not paid any cash dividends to date and does not
anticipate paying dividends in the foreseeable future. It is the present
intention of management to utilize all available funds for the development of
the Company's business.
13
<PAGE>
ITEM 2. LEGAL PROCEEDINGS.
The Company is not engaged in any legal proceedings other than the
ordinary routine litigation incidental to its business operations, which the
Company does not believe, in the aggregate, will have a material adverse effect
on the Company, or its operations.
No Director, Officer or affiliate of the Company, and no owner of
record or beneficial owner of more than 5.0% of the securities of the Company,
or any associate of any such Director, Officer or security holder is a party
adverse to the Company or has a material interest adverse to the Company in
reference to pending litigation.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
There are not and have not been any disagreements between the Company
and its accountants on any matter of accounting principles, practices or
financial statements disclosure.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
The following table lists all sales of unregistered securities by the
Company over the past three years.
Name # of Shares Exemption Type of Purchaser
Concha 10,000 4(2) (not involving a public offering) Sophisticated
Irwin 100,000 4(2) (not involving a public offering) Affiliate
Smith 30,000 4(2) (not involving a public offering) Affiliate
Martin 20,000 4(2) (not involving a public offering) Sophisticated
Hanna 10,000 4(2) (not involving a public offering) Sophisticated
Bristol 50,000 4(2) (not involving a public offering) Affiliate
All investors, including the non-affiliate investors, were given access to the
books and records of the Company, including financial statements, and given the
opportunity to ask management any and all questions concerning the Company and
its prospects for the future. The non-affiliate issuances of securities were
issued as compensation for services provided to the Company as were the
affiliate issuances.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
None.
14
<PAGE>
PART F/S
The financial statements of the Company and supplementary data are
included immediately following the signature page to this report. See Part II,
Item 1 for a list of the financial statements and financial statement schedules
included.
15
<PAGE>
PART III
ITEM 1. INDEX TO EXHIBITS.
(a) The following documents are filed as part of this report.
1. FINANCIAL STATEMENTS PAGE
----
Independent Auditor's Report F-1
Balance Sheets, December 31, 1999 (Unaudited) and
June 30, 1999 and 1998 F-2
Statements of Operations,
For the Six Months Ended December 31, 1999 (Unaudited) and
For the Years Ended June 30, 1999 and 1998 F-4
Statements of Changes in Stockholders' Equity,
For the Six Months Ended December 31, 1999 (Unaudited) and
For the Years Ended June 30, 1999 and 1998 F-5
Statements of Cash Flows,
For the Six Months Ended September 30, 1999 (Unaudited) and
For the Years Ended June 30, 1999 and 1998 F-6
Notes to Consolidated Financial Statements F-8
2. FINANCIAL STATEMENT SCHEDULES
The following financial statement schedules required by Regulation S-X
are included herein.
All Schedules are omitted because they are not applicable or the
required information is shown in the financial statements or notes thereto.
3. EXHIBITS
The following exhibits are included as part of this report:
Exhibit
NUMBER EXHIBIT
3.1 Articles of Articles of Incorporation and By-Laws.(1)
27.1 Financial Data Schedule
(1) Incorporated by reference
16
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
Phoenix Media Group, Ltd.
DATE: March 16, 2000
BY: /S/
---------------------------
Ronald R. Irwin, President
(Principal Executive and
Accounting Officer)
17
<PAGE>
PHOENIX MEDIA GROUP, LTD.
- : -
FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998
AND
DECEMBER 31, 1999 (UNAUDITED)
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Phoenix Media Group, Ltd.
Burbank, California
We have audited the accompanying balance sheets of Phoenix Media Group,
Ltd. as of June 30, 1999 and 1998, and the related statements of operations,
retained earnings, and cash flows for the two years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Phoenix Media Group,
Ltd. as of June 30, 1999 and 1998, and the results of its operations and its
cash flows for the two years then ended in conformity with generally accepted
accounting principles.
Respectfully submitted,
/S/ ROBISON, HILL & CO.
----------------------------
Certified Public Accountants
Salt Lake City, Utah
August 8, 1999
F - 1
<PAGE>
PHOENIX MEDIA GROUP, LTD.
BALANCE SHEETS
<TABLE>
<CAPTION>
(Unaudited)
December 31, June 30,
---------------------
1999 1999 1998
--------- --------- ---------
ASSETS
<S> <C> <C> <C>
Cash .......................................... $ 1,477 $ 2,312 $ 9,563
Investments held for sale ..................... -- 57,750 --
--------- --------- ---------
Total Current Assets .................. 1,477 60,062 9,563
--------- --------- ---------
PROPERTY AND EQUIPMENT
Office Equipment .............................. 13,721 12,965 12,965
Radio Equipment ............................... 21,256 16,405 13,045
Office Condominium ............................ 75,000 75,000 75,000
Vehicles ...................................... 34,173 15,200 15,200
--------- --------- ---------
Less Accumulated Depreciation ................. (38,480) (33,560) (21,996)
--------- --------- ---------
Net Property and Equipment ............ 105,670 86,010 94,214
--------- --------- ---------
OTHER ASSETS
Stockholder Loans ............................. 19,412 18,432 19,691
Intangibles (Net of Accumulated Amortization of
$52,540 and $39,540) ....................... 5,960 12,460 25,460
Goodwill (Net of Accumulated Amortization of
$16,167 and $12,167) ....................... 1,833 3,833 7,833
--------- --------- ---------
Total Non Current Assets .............. 27,205 34,725 52,984
--------- --------- ---------
Total Assets .......................... $ 134,352 $ 180,797 $ 156,761
========= ========= =========
</TABLE>
F - 2
<PAGE>
PHOENIX MEDIA GROUP, LTD.
BALANCE SHEETS
(CONTINUED)
<TABLE>
<CAPTION>
(Unaudited)
December 31, June 30,
---------------------
1999 1999 1998
--------- --------- ---------
LIABILITIES AND STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES
<S> <C> <C> <C>
Accounts payable .................................. $ 8,620 $ 2,135 $ 4,894
Accrued expenses .................................. 13,928 19,128 20,728
Stockholder loans ................................. 8,000 8,000 8,000
Current portion of long-term debt ................. 4,732 477 437
--------- --------- ---------
Total Current Liabilities ................. 35,280 29,740 34,059
--------- --------- ---------
LONG-TERM DEBT .................................... 63,596 48,230 48,708
--------- --------- ---------
Stockholders' equity
Series A convertible preferred stock
(par value $.01), 5,000,000 shares authorized,
no shares issued or outstanding ............. -- -- --
June 30, 1999 and 1998
Common Stock (par value $.001),
50,000,000 shares authorized,
6,720,649 shares issued and outstanding
June 30, 1999, and 1998 ...................... 6,881 6,721 6,721
Paid in capital in excess of par value ............ 317,689 285,849 285,849
Retained deficit .................................. (289,094) (189,743) (218,576)
--------- --------- ---------
Total Stockholders' Equity ................ 35,476 102,827 73,994
--------- --------- ---------
Total Liabilities and Stockholders' Equity $ 134,352 $ 180,797 $ 156,761
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F - 3
<PAGE>
PHOENIX MEDIA GROUP, LTD.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
(Unaudited)
For the Six
Months Ended For the Year Ended
December 31, June 30,
-------------------------
1999 1999 1998
----------- ----------- -----------
REVENUE
<S> <C> <C> <C>
Sales ................................... $ 189,498 $ 277,112 $ 144,656
Cost of sales ........................... 33,572 80,439 23,247
----------- ----------- -----------
Gross Margin .................... 155,926 196,673 121,409
OPERATING EXPENSES
General and Administrative .............. (222,491) (162,821) (172,509)
OTHER INCOME (EXPENSE)
Interest expense ........................ (2,307) (4,283) (4,319)
Interest income ......................... -- 109 234
Realized loss on sale of investments .... (32,859) -- --
Gain (loss) on sale of assets ........... 2,780 (45) --
----------- ----------- -----------
Income (loss) before income taxes ....... (98,951) 29,633 (55,185)
Income taxes ............................ 400 800 800
----------- ----------- -----------
Net Income (Loss) ....................... $ (99,351) $ 28,833 $ (55,985)
=========== =========== ===========
BASIC & DILUTED EARNINGS (LOSS) PER SHARE $ (0.01) $ 0.00 $ (0.01)
=========== =========== ===========
Weighted Average Shares Outstanding ..... 6,826,736 6,720,649 6,720,649
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F - 4
<PAGE>
PHOENIX MEDIA GROUP, LTD.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Capital in
Preferred Stock Common Stock Excess of Retained
Shares Amount Shares Amount Par Value Deficit
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balance July 1, 1997 .................. -- $ -- 6,710,649 $ 6,711 $ 280,859 $(162,591)
Issuance of shares for services ....... -- -- 10,000 10 4,990 --
Net Loss .............................. -- -- -- -- -- (55,985)
--------- --------- --------- --------- --------- ---------
Balance June 30, 1998 ................. -- -- 6,720,649 6,721 285,849 (218,576)
Net Income ............................ -- -- -- -- -- 28,833
--------- --------- --------- --------- --------- ---------
Balance June 30, 1999 ................. -- -- 6,720,649 6,721 285,849 (189,743)
--------- --------- --------- --------- --------- ---------
Issuance of shares for employee bonuses -- -- 160,000 160 31,840 --
Net Loss .............................. -- -- -- -- -- (99,351)
--------- --------- --------- --------- --------- ---------
Balance December 31, 1999 (Unaudited) . -- $ -- 6,880,649 $ 6,881 $ 317,689 $(289,094)
========= ========= ========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F - 5
<PAGE>
PHOENIX MEDIA GROUP, LTD.
STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
(Unaudited)
For the Six
Months Ended For the Year Ended
December 31, June 30,
-------------------
1999 1999 1998
-------- -------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net income (loss) ................................. $(99,351) $ 28,833 $(55,985)
Adjustments to reconcile Net income (loss)
to net cash provided by (used in)
Operating activities:
Amortization and depreciation ............... 17,200 29,719 27,417
(Gain) Loss on sale of assets ............... (2,780) 45 --
Common stock issued for services ............ 32,000 -- --
(Gain) Loss on sale of investments .......... 32,859 -- --
Change in operating assets and liabilities:
Accounts receivable ......................... -- -- 5,500
Investments held for sale ................... -- (57,750) --
Accounts payable ............................ 6,485 (2,759) (1,071)
Checks written in excess of cash in bank .... -- -- (3,994)
Accrued expenses ............................ (5,200) (1,600) 20,728
-------- -------- --------
Net cash used by operating activities ............. (18,787) (3,512) (7,405)
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Stockholders loans ................................ 980 1,259 7,909
Proceeds From Investments ......................... 24,300 -- --
Notes receivable .................................. -- -- 19,500
Purchase of property and equipment ................ (5,775) (4,561) (15,200)
-------- -------- --------
Net cash used in investing activities ............. 19,505 (3,302) 12,209
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of debt .................... -- -- --
Principle payments on debt ........................ (1,553) (437) (404)
Proceeds from capital stock issued ................ -- -- 5,000
-------- -------- --------
Net cash provided by (used in) financing activities (1,553) (437) 4,596
-------- -------- --------
Net increase (decrease) in
cash and cash equivalents ....................... (835) (7,251) 9,400
Cash and cash equivalents at beginning of period .. 2,312 9,563 163
-------- -------- --------
Cash and cash equivalents at end of period ........ $ 1,477 $ 2,312 $ 9,563
======== ======== ========
</TABLE>
F - 6
<PAGE>
PHOENIX MEDIA GROUP, LTD.
STATEMENTS OF CASH FLOW
CONTINUED
<TABLE>
<CAPTION>
(Unaudited)
For the Six
Months Ended For the Year Ended
December 31, June 30,
-------------------
1999 1999 1998
-------- -------- --------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
<S> <C> <C> <C>
Interest ........................ $ 2,371 $ 4,283 $ 4,319
Income taxes .................... 800 -- 1,050
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: None
- ---------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F - 7
<PAGE>
PHOENIX MEDIA GROUP, LTD.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998
(REFERENCES TO DECEMBER 31, 1999 ARE UNAUDITED)
NOTE 1 - ORGANIZATION AND SUMMARY OF ACCOUNTING POLICIES
This summary of accounting policies of Phoenix Media Group, Ltd. is
presented to assist in understanding the Company's financial statements. The
accounting policies conform to generally accepted accounting principles and have
been consistently applied in the preparation of the financial statements.
The unaudited financial statements as of December 31, 1999 and for the
Six months then ended reflect, in the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary to fairly state the
financial position and results of operations for the Four months. Operating
results for interim periods are not necessarily indicative of the results which
can be expected for full Year.
ORGANIZATION AND BASIS OF PRESENTATION
The Company was organized under the laws of the State of Utah on
December 5, 1985 as Bullseye Corp. On June 22, 1992 the name of the Company was
changed to Natural Solutions, Ltd. and the corporate domicile was changed to the
State of Nevada. On March 25, 1994, the Company name was changed to Phoenix
Media Group, Ltd. The Company is in the development stage through June 30, 1994.
The June 30, 1995 year is the first year during which it is considered an
operating company.
NATURE OF BUSINESS
The Company was formed for the purpose of creating a vehicle to obtain
capital to seek out, investigate and acquire interests in products and
businesses which may have potential for profit. The Company's objective is to
become a major player in the communications industry with an emphasis on radio,
television and Internet services.
CASH EQUIVALENTS
For the purpose of reporting cash flows, the Company considers all
highly liquid debt instruments purchased with maturity of three months or less
to be cash equivalents to the extent the funds are not being held for investment
purposes.
INCOME TAXES
The Company accounts for income taxes under the provisions of SFAS No.
109, "Accounting for Income Taxes." SFAS No.109 requires recognition of deferred
income tax assets and liabilities for the expected future income tax
consequences, based on enacted tax laws, of temporary differences between the
financial reporting and tax bases of assets and liabilities.
F - 8
<PAGE>
PHOENIX MEDIA GROUP, LTD.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998
(REFERENCES TO DECEMBER 31, 1999 ARE UNAUDITED)
(CONTINUED)
NOTE 1 - ORGANIZATION AND SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
- --------------------------------------------------------------------
EARNINGS (LOSS) PER SHARE
In 1997, the Financial Accounting Standards Board issued SFAS No. 128,
"Earnings per Share" (EPS). SFAS No. 128 replaced the calculation of primary and
fully diluted earnings per share with basic and diluted earnings per share.
The reconciliations of the numerators and denominators of the basic and
diluted earnings per share ("EPS") computations are as follows:
For the Six Months Ended December 31, 1999
------------------------------------------
Per Share
Income Shares Amount
--------- --------- ---------
EPS
Net Income to common
SHAREHOLDERS .......................... $ (99,351) 6,826,736 (0.01)
========= ========= =========
For the Year Ended June 30, 1999
------------------------------------
Per Share
Income Shares Amount
--------- --------- ---------
EPS
Net Income to common
SHAREHOLDERS ......................... $ 28,833 6,720,649 $ --
========= ========= =========
For the Year Ended June 30, 1998
------------------------------------
Per Share
Income Shares Amount
--------- --------- ---------
EPS
Net Loss to common
SHAREHOLDERS .......................... $ (55,985) 6,720,649 $ (0.01)
========= ========= =========
F - 9
<PAGE>
PHOENIX MEDIA GROUP, LTD.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998
(REFERENCES TO DECEMBER 31, 1999 ARE UNAUDITED)
(CONTINUED)
NOTE 1 - ORGANIZATION AND SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
- --------------------------------------------------------------------
AMORTIZATION
Intangibles and goodwill are amortized using the straight line method
over five years. Amortization expense related to intangibles and goodwill
totaled $17,000 for each of the years ended June 30, 1999 and 1998.
Goodwill was created by the excess of the purchase price over cost of
acquisitions made in fiscal year 1995, and is amortized on a straight-line basis
over 5 years. Management regularly assesses the carrying amount of intangible
assets and where, in their opinion, the value is less than the carrying amount,
the loss is recognized immediately.
The Company has implemented the provisions of SFAS No. 121, "Accounting
for the impairment of Long-Lived Assets and for Long-Lived Assets Disposed of."
SFAS No. 121 requires that long-lived assets and certain identifiable
intangibles to be held and used by the Company be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. If the sum of the expected future cash flows
from the use of the assets and its eventual disposition (undiscounted and
without interest charges) is less than the carrying amount of the asset, an
impairment loss is recognized.
DEPRECIATION
Office furniture, equipment and leasehold improvements, are stated at
cost. Depreciation and amortization are computed using the straight-line method
over the estimated economic useful lives of the related assets as follows:
Office furniture 5-10 years
Equipment 5- 7 years
Vehicles 5-10 years
Office Condominium 39 years
Maintenance and repairs are charged to operations; betterments are
capitalized. The cost of property sold or otherwise disposed of and the
accumulated depreciation thereon are eliminated from the property and related
accumulated depreciation accounts, and any resulting gain or loss is credited or
charged to income.
F - 10
<PAGE>
PHOENIX MEDIA GROUP, LTD.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998
(REFERENCES TO DECEMBER 31, 1999 ARE UNAUDITED)
(CONTINUED)
NOTE 1 - ORGANIZATION AND SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
- --------------------------------------------------------------------
PERVASIVENESS OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles require management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Certain reclassifications have been made in the 1998 financial
statements to conform with the 1999 presentation.
CONCENTRATION OF CREDIT RISK
The Company has no significant off-balance-sheet concentrations of
credit risk such as foreign exchange contracts, options contracts or other
foreign hedging arrangements. The Company maintains the majority of its cash
balances with one financial institution, in the form of demand deposits.
INVESTMENTS
The Company's securities investments that are bought and held
principally for the purpose of selling them in the near term are classified as
trading securities. Trading securities are recorded at fair value on the balance
sheet in current assets, with the change in fair value during the period
included in earnings.
Investments in securities are summarized as follows:
December 31, 1999
-------------------------------
Gross Gros
Unrealized Unrealized Fair
Gain Loss Value
--------- --------- ---------
Trading Securities ............................ -- -- --
========= ========= =========
F - 11
<PAGE>
PHOENIX MEDIA GROUP, LTD.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998
(REFERENCES TO DECEMBER 31, 1999 ARE UNAUDITED)
(CONTINUED)
NOTE 1 - ORGANIZATION AND SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
- --------------------------------------------------------------------
INVESTMENTS (CONTINUED)
June 30, 1999
-------------------------------
Gross Gros
Unrealized Unrealized Fair
Gain Loss Value
--------- --------- ---------
Trading Securities ......................... -- -- 57,750
========= ========= =========
June 30, 1998
-------------------------------
Gross Gros
Unrealized Unrealized Fair
Gain Loss Value
--------- --------- ---------
Trading Securities ............................ -- -- --
========= ========= =========
Realized Gains and losses are determined on the basis of specific
identification. During the six months ended December 31, 1999 and the years
ended June 30, 1999 and 1998, sales proceeds and gross realized gains and losses
on securities classified as trading securities were:
(Unaudited)
For the Six
Months Ended For the Year Ended
December 31, June 30,
-----------------------
1999 1999 1998
--------- --------- ---------
Sale Proceeds ........................ $ 24,300 $ -- $ --
========= ========= =========
Gross Realized Losses ................ $ 32,859 $ -- $ --
========= ========= =========
Gross Realized Gains ................. $ -- $ -- $ --
========= ========= =========
F - 12
<PAGE>
PHOENIX MEDIA GROUP, LTD.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998
(REFERENCES TO DECEMBER 31, 1999 ARE UNAUDITED)
(CONTINUED)
NOTE 2 - CAPITAL TRANSACTIONS
PREFERRED STOCK
The Board of Directors of the Company has the authority to fix by
resolution for each particular series of preferred stock the number of shares to
be issued; the rate and terms on which cumulative or non-cumulative dividends
shall be paid; conversion features of the preferred stock; redemption rights and
prices, if any; terms of the sinking fund, if any to be provided for the shares;
voting powers of preferred shareholders; and any other special rights,
qualifications, limitations, or restrictions.
NOTE 3 - STOCK OPTIONS
Effective April 9, 1993 the Board of Directors approved a five year
"Option to Purchase" to be exercised on or after May 1, 1993 and to expire at
midnight, mountain time, on June 30, 1998. Under the provisions of the plan,
options to purchase up to 230,000 shares at prices ranging from $1.00 to $5.00
per share were granted to eight directors and members of the Advisory Board. The
purchase price for the common stock under these options may be paid in cash, by
delivering shares of common stock already owned by the optionee (valued at its
fair market value at the time of exercise), by delivering options (valued at the
amount by which the fair market value of the common stock at the time of
exercise exceeds the exercise price), or other consideration acceptable to the
Company. At June 30, 1998 all 230,000 options expired unexercised.
NOTE 4 - INCOME TAXES
Deferred taxes result from temporary differences in the recognition of
income and expenses for income tax reporting and financial statement reporting
purposes. Deferred benefits of $64,000 and $74,000 for the years ended June 30,
1999 and 1998 respectively, are the result of net operating losses.
F - 13
<PAGE>
PHOENIX MEDIA GROUP, LTD.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998
(REFERENCES TO DECEMBER 31, 1999 ARE UNAUDITED)
(CONTINUED)
NOTE 4 - INCOME TAXES (CONTINUED)
The Company has recorded net deferred income taxes in the accompanying
balance sheets as follows:
As at June 30,
---------------------
1999 1998
--------- ---------
Future deductible temporary differences related to
Reserves, accruals, and net operating losses ........ $ 64,000 $ 74,000
Valuation allowance .................................... (64,000) (74,000)
--------- ---------
Net Deferred Income Tax ................................ $ -- $ --
========= =========
As of June 30, 1999, the Company had a net operating loss ("NOL") carry
forward for income tax reporting purposes of approximately $189,000 available to
offset future taxable income. This net operating loss carry forward expires at
various dates between June 30, 2001 and 2009. A loss generated in a particular
year will expire for federal tax purposes if not utilized within 15 years.
Additionally, the Internal Revenue Code contains provisions which could reduce
or limit the availability and utilization of these NOLs if certain ownership
changes have taken place or will take place. In accordance with SFAS No. 109, a
valuation allowance is provided when it is more likely than not that all or some
portion of the deferred tax asset will not be realized. Due to the uncertainty
with respect to the ultimate realization of the NOLs, the Company established a
valuation allowance for the entire net deferred income tax asset of $64,000 as
of June 30, 1999. Also consistent with SFAS No. 109, an allocation of the income
(provision) benefit has been made to the loss from continuing operations.
The difference between the effective income tax rate and the federal
statutory income tax rate on the loss from continuing operations are presented
below:
As at June 30,
---------------------
1999 1998
--------- ---------
Expense (Benefit) at the federal statutory rate of 34% $ 9,800 $ (19,000)
Nondeductible expenses 340 (12)
--------- ---------
Utilization of net operating loss carryforward $ (10,140) $ 19,012
--------- ---------
$ -- $ --
========= =========
f - 14
<PAGE>
PHOENIX MEDIA GROUP, LTD.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998
(REFERENCES TO DECEMBER 31, 1999 ARE UNAUDITED)
(CONTINUED)
NOTE 5 - RELATED PARTY TRANSACTIONS
During 1997 The Company loaned an officer/director $20,100, interest at
1%, repayable at $201 per month for ten months with a balloon payment due in
2007. In addition an officer/director advanced $8,000 at 0% interest, to the
Company.
During the six months ended December 31, 1999, the Company loaned an
additional $980.
NOTE 6 - LONG-TERM DEBT
Long-term debt consists of the following:
(Unaudited)
December 31, As at June 30,
-----------------
1999 1999 1998
------- ------- -------
Mortgage payable with interest at 8.75%,
payable monthly $393.36, due March 22,
2003, collateralized by deed of trust ........... $48,474 $48,707 $49,145
Note Payable with interest at 4.90%,
payable monthly $398.81, due July 15, 2004 ..... 19,854 -- --
------- ------- -------
Less Current Maturities .......................... 4,732 477 437
------- ------- -------
Net Long-term Debt ............................... $63,596 $48,230 $48,708
======= ======= =======
Annual principal payments on long-term debt are as follows:
2000 $ 4,732
2001 4,633
2002 4,886
2003 5,154
2004 3,333
------------------
thereafter $ 45,844
==================
F - 15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE SHEET OF PHOENIX MEDIA GROUP, LTD. AS OF DECEMBER 31, 1999 AND THE
RELATED STATEMENTS OF OPERATIONS AND CASH FLOWS FOR THE SIX MONTHS THEN ENDED
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-END> DEC-31-1999
<CASH> 1
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1
<PP&E> 144
<DEPRECIATION> 38
<TOTAL-ASSETS> 134
<CURRENT-LIABILITIES> 35
<BONDS> 0
0
0
<COMMON> 7
<OTHER-SE> 28
<TOTAL-LIABILITY-AND-EQUITY> 134
<SALES> 189
<TOTAL-REVENUES> 189
<CGS> 34
<TOTAL-COSTS> 34
<OTHER-EXPENSES> 222
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2
<INCOME-PRETAX> (99)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (99)
<EPS-BASIC> (.01)
<EPS-DILUTED> (.01)
</TABLE>
