UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB
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 br 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........... 4
Item 3. Description of Property.............................................. 7
Item 4. Security Ownership of Certain Beneficial Owners and Management....... 7
Item 5. Directors, Executive Officers, Promoters and Control Persons;........ 8
Item 6. Executive Compensation............................................... 9
Item 7. Certain Relationships and Related Transactions....................... 9
Item 8. Description of Securities............................................ 9
PART II
Item 1. Market Price of and Dividends on the Registrant's Common
Equity and Other Shareholder Matters................................... 10
Item 2. Legal Proceedings................................................... 10
Item 3. Changes in and Disagreements With Accountants....................... 11
Item 4. Recent Sales of Unregistered Securities............................. 11
Item 5. Indemnification of Directors and Officers........................... 11
Part F/S Financial Statements............................................... 11
PART III
Item 1. Index to Exhibits................................................... 12
Item 2. Description of Exhibits............................................. 12
2
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
(a) Business Development.
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 was 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.
(b) Business of Issuer.
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.
Briefly describe the business and include, to the extent material to an
understanding of the issuer:
PRINCIPAL PRODUCTS OR SERVICES - The production of radio and television
infomercials and commercials. The development, publication, manufacture, design
and sale of books and toys in the image of or otherwise relating to the
character Manfred Moose(TM).
DISTRIBUTION METHODS OF THE PRODUCTS OR SERVICES - 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.
STATUS OF ANY PUBLICLY ANNOUNCED NEW PRODUCT OR SERVICE - In Fiscal Year 1999,
the Company announced the development of the Manfred Moose(TM) Millenium Doll
and the book "Manfred Moose(TM) Flies to Hong Kong." Both products have been
completed and are being sold in the manner described above.
COMPETITIVE BUSINESS CONDITIONS AND ISSUER'S COMPETITIVE POSITION IN THE
INDUSTRY AND METHODS OF COMPETITION - Regarding radio and television commercials
and infomercials, the Company is faced with significant competition. The
Company's relative position in the industry is small.
Regarding Manfred Moose(TM), the competition is substantial including
several major corporations. Our relative position in the industry is very small.
3
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SOURCES AND AVAILABILITY OF RAW MATERIALS AND THE NAMES OF PRINCIPAL SUPPLIERS -
Not Applicable.
DEPENDENCE ON ONE OR A FEW MAJOR CUSTOMERS - Not Applicable.
PATENTS, TRADEMARKS, LICENCES, FRANCHISES, CONCESSIONS, ROYALTY AGREEMENTS OR
LABOR CONTRACTS, INCLUDING DURATION - The Company holds a trademark on the name
Manfred Moose(TM) and copyrights on several Manfred Moose(TM) images.
NEED FOR ANY GOVERNMENT APPROVAL OF PRINCIPAL PRODUCTS OR SERVICES. IF
GOVERNMENT APPROVAL IS NECESSARY AND THE ISSUER HAS NOT YET RECEIVED THAT
APPROVAL, DISCUSS THE STATUS OF THE APPROVAL WITHIN THE GOVERNMENT APPROVAL
PROCESS - Not Applicable.
EFFECT OF EXISTING OR PROBABLE GOVERNMENTAL REGULATIONS ON THE BUSINESS - Not
Applicable.
ESTIMATE OF THE AMOUNT SPENT DURING EACH OF THE LAST TWO FISCAL YEARS ON
RESEARCH AND DEVELOPMENT ACTIVITIES, AND IF APPLICABLE THE EXTENT TO WHICH THE
COST OF SUCH ACTIVITIES ARE BORNE DIRECTLY BY CUSTOMERS - Any amounts spent by
the Company for research and development are immaterial.
COSTS AND EFFECTS OF COMPLIANCE WITH ENVIRONMENTAL LAWS (FEDERAL, STATE AND
LOCAL) - None
NUMBER OF TOTAL EMPLOYEES AND NUMBER OF FULL TIME EMPLOYEES - The Company has 4
employees, of which, two are full time.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
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. Although the Company has provided products for 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.
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.
4
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1999 1998
------- -------
Sales, Net ........................................... 100.0% 100.0%
Cost of Sales ........................................ 29.0% 16.1%
----- -----
Gross Margin ......................................... 71.0% 83.9%
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 and the addition of new products and services.
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.
OPERATING EXPENSES
Operating expenses during Fiscal 1999 decreased approximately $10,000
or5.61% compared to Fiscal 1998 from $172,509 to $162,821. As a percentage of
sales, operating expenses decreased 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.
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
5
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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 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.
Cash flows used in 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 principle 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.
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
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
6
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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.
YEAR 2000 COMPLIANCE - The Company utilizes software and related technologies
which have been programmed to recognize and properly process data fields
containing a two digit year and commonly referred to as the Year 2000 Compliance
issue. Management has concluded that a material effect on the Company's
financial condition is not reasonably likely to occur as a result of Year 2000
issues. While the Company has little communication with the systems of its
vendors and suppliers, it cannot measure the impact that the Year 2000 issue
will have on such parties with which it conducts business.
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 offiers and nominees: at July 31, 1998.
(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 900,000 13.39%
1601 Kinwick Centre
32 Hollywood Road
Central Hong Kong
Zhong Hong Li
7
<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 52.08%
290 E. Verdugo Ave.
Burbank, CA 91502
Richard Spangler, President & 100,000 1.49%
Director
290 E. Verdugo Ave.
Burbank, CA 91502
David Petrik, Director 25,000 0.37%
290 E. Verdugo Ave.
Burbank, CA 91502
WAYNE K. SMITH, SEC/TREAS. 68,000 1.01%
290 E. Verdugo Ave.
Burbank, CA 91502
Directors and executive 3,693,000 54.95%
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
Richard Spangler 65 President & Director Until next meeting
David Petrik 52 Director Until next meeting
Wayne Smith 45 Secretary/Treasurer Until next meeting
8
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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 employement
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 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 $2,500 at 0% interest, to the
Company.
ITEM 8. DESCRIPTION OF SECURITIES.
Series A convertible preferred stock par value $.01, 5,000,000 shares
authorized, no shares issued or outstanding.
Common Stock, par value $.001, 50,000,000 shares authorized, 6,720,649
shares issued and outstanding.
9
<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
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.
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.
10
<PAGE>
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 Company over the past three years has sold 10,000 shares of common
stock.
On October 30, 1997 the Company issued 10,000 shares in exchange for
$5,000 in consulting services under Section 4(2) of the Securities and Exchange
Commission Act of 1933 to Mr. William
Concha.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
None.
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.
11
<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, September 30, 1999 (Unaudited) and
June 30, 1999 and 1998 F-2
Statements of Operations,
For the Three Months Ended September 30, 1999 (Unaudited) and
For the Years Ended June 30, 1999 and 1998 F-4
Statements of Changes in Stockholders' Equity,
For the Three Months Ended September 30, 1999 (Unaudited) and
For the Years Ended June 30, 1999 and 1998 F-5
Statements of Cash Flows,
For the Three Months Ended September 30, 1999 (Unaudited) and
For the Years Ended June 30, 1999 and 1998 F-6
Notes to Consolidated Financial Statements F-7
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
12
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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: January 24, 2000
BY: /S/
Ronald R. Irwin, President
(Principal Executive and
Accounting Officer)
13
<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)
September 30, June 30,
----------------------
1999 1999 1998
--------- --------- ---------
ASSETS
<S> <C> <C> <C>
Cash .......................................... $ 5,219 $ 2,312 $ 9,563
Investments held for sale ..................... 63,539 57,750 --
--------- --------- ---------
Total Current Assets .................. 68,758 60,062 9,563
--------- --------- ---------
PROPERTY AND EQUIPMENT
Office Equipment .............................. 12,965 12,965 12,965
Radio Equipment ............................... 20,556 16,405 13,045
Office Condominium ............................ 75,000 75,000 75,000
Vehicles ...................................... 15,200 15,200 15,200
--------- --------- ---------
Less Accumulated Depreciation ................. (37,060) (33,560) (21,996)
--------- --------- ---------
Net Property and Equipment ............ 86,661 86,010 94,214
--------- --------- ---------
OTHER ASSETS
Stockholder Loans ............................. 20,082 18,432 19,691
Intangibles (Net of Accumulated Amortization of
$52,540 and $39,540) ....................... 9,210 12,460 25,460
Goodwill (Net of Accumulated Amortization of
$16,167 and $12,167) ....................... 2,833 3,833 7,833
--------- --------- ---------
Total Non Current Assets .............. 32,125 34,725 52,984
--------- --------- ---------
Total Assets .......................... $ 187,544 $ 180,797 $ 156,761
========= ========= =========
</TABLE>
F - 2
<PAGE>
PHOENIX MEDIA GROUP, LTD.
BALANCE SHEETS
(CONTINUED)
<TABLE>
<CAPTION>
(Unaudited)
September 30, June 30,
----------------------
1999 1999 1998
--------- --------- ---------
LIABILITIES AND STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES
<S> <C> <C> <C>
Accounts payable .............................. $ 10,060 $ 2,135 $ 4,894
Accrued expenses .............................. 16,327 19,128 20,728
Stockholder loans ............................. 8,000 8,000 8,000
Current portion of long-term debt ............. 362 477 437
--------- --------- ---------
Total Current Liabilities ............. 34,749 29,740 34,059
--------- --------- ---------
LONG-TERM DEBT ................................ 48,230 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 ................... 6,721 6,721 6,721
Paid in capital in excess of par value ........ 285,849 285,849 285,849
Retained deficit .............................. (188,005) (189,743) (218,576)
--------- --------- ---------
Total Stockholders' Equity ............. 104,565 102,827 73,994
--------- --------- ---------
Total Liabilities and Stockholders' Equity $ 187,544 $ 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 Three
Months Ended For the Year Ended
September 30, June 30,
----------------------
1999 1999 1998
--------- --------- ---------
REVENUE
<S> <C> <C> <C>
Sales ......................................... $ 112,650 $ 277,112 $ 144,656
Cost of sales ................................. 14,915 80,439 23,247
--------- --------- ---------
Gross Margin .......................... 97,735 196,673 121,409
OPERATING EXPENSES
General and Administrative .................... (100,522) (162,821) (172,509)
OTHER INCOME (EXPENSE)
Interest expense .............................. (1,065) (4,283) (4,319)
Interest income ............................... -- 109 234
Unrealized gains on trading investments ....... 5,790 -- --
Gain (loss) on sale of assets ................. -- (45) --
--------- --------- ---------
Income (loss) before income taxes ............. 1,938 29,633 (55,185)
Income taxes .................................. 200 800 800
--------- --------- ---------
Net Income (Loss) ............................. $ 1,738 $ 28,833 $ (55,985)
========= ========= =========
BASIC & DILUTED EARNINGS (LOSS) PER SHARE ..... $ 0.00 $ 0.00 $ (0.01)
========= ========= =========
Weighted Average Shares Outstanding ........... 6,720,649 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 Loss ............................. -- -- -- -- -- 28,833
--------- --------- --------- --------- --------- ---------
Balance June 30, 1999 ................ -- -- 6,720,649 6,721 285,849 (189,743)
--------- --------- --------- --------- --------- ---------
Net Loss ............................. -- -- -- -- -- 1,738
--------- --------- --------- --------- --------- ---------
Balance September 30, 1999 (Unaudited) -- $ -- 6,720,649 $ 6,721 $ 285,849 $(188,005)
========= ========= ========= ========= ========= =========
</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 Three
Months Ended For the Year Ended
September 30, June 30,
----------------------
1999 1999 1998
--------- --------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net income (loss) ............................. $ 1,738 $ 28,833 $ (55,985)
Adjustments to reconcile Net income (loss)
to net cash provided by (used in)
Operating activities:
Amortization and depreciation ........... 7,750 29,719 27,417
Loss on sale of assets .................. -- 45 --
Change in operating assets and liabilities:
Accounts receivable ..................... -- -- 5,500
Investments held for sale ............... (5,790) (57,750) --
Accounts payable ........................ 7,925 (2,759) (1,071)
Checks written in excess of cash in bank -- -- (3,994)
Accrued expenses ........................ (2,800) (1,600) 20,728
--------- --------- ---------
Net cash used by operating activities ......... 8,823 (3,512) (7,405)
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Stockholders loans ............................ (1,650) 1,259 7,909
Notes receivable .............................. -- -- 19,500
Purchase of property and equipment ............ (4,151) (4,561) (15,200)
--------- --------- ---------
Net cash used in investing activities ......... (5,801) (3,302) 12,209
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of debt ................ -- -- --
Principle payments on debt .................... (115) (437) (404)
Proceeds from capital stock issued ............ -- -- 5,000
--------- --------- ---------
Net cash provided by (used in) financing activities (115) (437) 4,596
--------- --------- ---------
Net increase (decrease) in
cash and cash equivalents ................... 2,907 (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 .... $ 5,219 $ 2,312 $ 9,563
========= ========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Interest ................................... $ 1,065 $ 4,283 $ 4,319
Income taxes ............................... -- -- 1,050
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: None
The accompanying notes are an integral part of these financial statements.
</TABLE>
F - 6
<PAGE>
PHOENIX MEDIA GROUP, LTD.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998
(REFERENCES TO SEPTEMBER 30, 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 September 30, 1999 and for the
Three 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 - 7
<PAGE>
PHOENIX MEDIA GROUP, LTD.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998
(REFERENCES TO SEPTEMBER 30, 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:
<TABLE>
<CAPTION>
For the Three Months Ended September 30, 1999
Per Share
Income Shares Amount
------------------ ----------------- -----------------
EPS
Net Income to common
<S> <C> <C> <C>
shareholders $ 1,738 6,720,649 $ --
================== ================= =================
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)
================== ================= =================
</TABLE>
F - 8
<PAGE>
PHOENIX MEDIA GROUP, LTD.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998
(REFERENCES TO SEPTEMBER 30, 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
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 - 9
<PAGE>
PHOENIX MEDIA GROUP, LTD.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998
(REFERENCES TO SEPTEMBER 30, 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.
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
F - 10
<PAGE>
PHOENIX MEDIA GROUP, LTD.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998
(REFERENCES TO SEPTEMBER 30, 1999 ARE UNAUDITED)
(CONTINUED)
NOTE 3 - STOCK OPTIONS (CONTINUED)
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.
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.
F - 11
<PAGE>
PHOENIX MEDIA GROUP, LTD.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998
(REFERENCES TO SEPTEMBER 30, 1999 ARE UNAUDITED)
(CONTINUED)
NOTE 4 - INCOME TAXES (CONTINUED)
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
-------- ---------
$ -- $ --
======== =========
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 $2,500 at 0% interest, to the
Company.
NOTE 6 - LONG-TERM DEBT
Long-term debt consists of the following:
As at June 30,
-------------------
1999 1998
-------- --------
Mortgage payable with interest at 8.75%,
payable monthly $393.36, due March 22,
2003, collateralized by deed of trust $ 48,707 $ 49,145
Less Current Maturities 477 437
-------- --------
Net Long-term Debt $ 48,230 $ 48,708
======== ========
F - 12
<PAGE>
PHOENIX MEDIA GROUP, LTD.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998
(REFERENCES TO SEPTEMBER 30, 1999 ARE UNAUDITED)
(CONTINUED)
NOTE 6 - LONG-TERM DEBT (CONTINUED)
Annual principal payments on long-term debt are as follows:
2000 $ 477
2001 521
2002 568
2003 620
2004 676
thereafter $ 45,844
F - 13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE SHEET OF PHOENIX MEDIA GROUP, LTD, AS OF SEPTEMBER 30, 1999 AND JUNE 30,
1999 AND 1998 AND THE RELATED STATEMENTS OF OPERATIONS AND CASH FLOWS FOR THE
THREE MONTHS AND THE YEARS THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000899049
<NAME> PHOENIX MEDIA GROUP, LTD.
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C> <C> <C>
<PERIOD-TYPE> 3-MOS YEAR YEAR
<FISCAL-YEAR-END> JUN-30-2000 JUN-30-1999 JUN-30-1998
<PERIOD-START> JUL-01-1999 JUL-01-1998 JUL-01-1997
<PERIOD-END> SEP-30-1999 JUN-30-1999 JUN-30-1998
<EXCHANGE-RATE> 1.00 1.00 1.00
<CASH> 5 2 10
<SECURITIES> 64 58 0
<RECEIVABLES> 0 0 0
<ALLOWANCES> 0 0 0
<INVENTORY> 0 0 0
<CURRENT-ASSETS> 69 60 10
<PP&E> 124 120 116
<DEPRECIATION> 37 34 22
<TOTAL-ASSETS> 188 181 157
<CURRENT-LIABILITIES> 35 30 34
<BONDS> 0 0 0
0 0 0
0 0 0
<COMMON> 7 7 7
<OTHER-SE> 98 96 67
<TOTAL-LIABILITY-AND-EQUITY> 188 181 157
<SALES> 113 277 145
<TOTAL-REVENUES> 113 277 145
<CGS> 15 80 23
<TOTAL-COSTS> 15 80 23
<OTHER-EXPENSES> 101 163 173
<LOSS-PROVISION> 101 163 173
<INTEREST-EXPENSE> 1 4 4
<INCOME-PRETAX> 2 30 (55)
<INCOME-TAX> 0 1 1
<INCOME-CONTINUING> 0 0 0
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 2 29 (56)
<EPS-BASIC> 0 0 (0.01)
<EPS-DILUTED> 0 0 (0.01)
</TABLE>
