UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
Mark One)
[x] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from To
Commission file number 0-21376
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PHOENIX MEDIA GROUP, LTD.
--------------------------
(Exact name of small business issuer as specified in its charter)
NEVADA 33-0714007
- -------------------------------- ---------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or organization)
290 EAST VERDUGO, SUITE 207, BURBANK, CALIFORNIA 91502
------------------------------------------------------
(Address of principal executive offices)
(818) 563-3900
---------------
(Issuer's telephone number)
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practical date: March 31, 2000 6,930,649
------------------------------
Transitional Small Business Disclosure Format (check one). Yes ; No X
---- ---
<PAGE>
PART I
Item 1. Financial Statements
INDEPENDENT ACCOUNTANT'S REPORT
Phoenix Media Group, Ltd.
We have reviewed the accompanying balance sheets of Phoenix Media
Group, Ltd. as of March 31, 2000, and the related statements of operations for
the three and nine month periods then ended, and cash flows for the nine month
period then ended. These financial statements are the responsibility of the
Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statement taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the accompanying financial statements for them to be in
conformity with generally accepted accounting principles.
Respectfully submitted
/s/ Robison, Hill & Co.
Certified Public Accountants
Salt Lake City, Utah
May 4, 2000
<PAGE>
PHOENIX MEDIA GROUP, LTD.
BALANCE SHEETS
March 31, June 30,
--------- ---------
2000 1999
--------- ---------
ASSETS
Cash ............................................... $ 10,871 $ 2,312
Investments held for sale .......................... -- 57,750
--------- ---------
Total Current Assets ....................... 10,871 60,062
--------- ---------
Property and Equipment
Office Equipment ................................... 13,721 12,965
Radio Equipment .................................... 35,069 16,405
Office Condominium ................................. 75,000 75,000
Vehicles ........................................... 34,173 15,200
--------- ---------
Less Accumulated Depreciation ...................... (44,280) (33,560)
--------- ---------
Net Property and Equipment ................. 113,683 86,010
--------- ---------
Other Assets
Stockholder Loans .................................. 19,512 18,432
Intangibles (Net of Accumulated Amortization of
$62,290 and $52,540) ............................ 2,710 12,460
Goodwill (Net of Accumulated Amortization of
$19,167 and $16,167) ............................ 833 3,833
--------- ---------
Total Non Current Assets ................... 23,055 34,725
--------- ---------
Total Assets ............................... $ 147,609 $ 180,797
========= =========
<PAGE>
PHOENIX MEDIA GROUP, LTD.
BALANCE SHEETS
(Continued)
March 31, June 30,
--------- ---------
2000 1999
--------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable ..................................... $ 9,603 $ 2,135
Accrued expenses ..................................... 14,128 19,128
Stockholder loans .................................... 8,000 8,000
Current portion of long-term debt .................... 4,612 477
--------- ---------
Total Current Liabilities .................... 36,343 29,740
--------- ---------
Long-term Debt ....................................... 62,455 48,230
--------- ---------
Stockholders' equity
Series A convertible preferred stock
(par value $.01), 5,000,000 shares authorized,
no shares issued or outstanding ................ -- --
March 31, 2000, and June 31, 1999
Common Stock (par value $.001), 50,000,000 shares
authorized, 6,930,649 and
6,720,649 shares issued and outstanding
March 31, 2000, and June 31, 1999 ............... 6,931 6,721
Paid in capital in excess of par value ............... 367,639 285,849
Retained deficit ..................................... (325,759) (189,743)
--------- ---------
Total Stockholders' Equity ................... 48,811 102,827
--------- ---------
Total Liabilities and Stockholders' Equity ... $ 147,609 $ 180,797
========= =========
See accompanying notes and accountants' report.
<PAGE>
PHOENIX MEDIA GROUP, LTD.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the For the For the For the
Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
March 31, March 31, March 31, March 31,
2000 1999 2000 1999
----------- ----------- ----------- ------------
Revenue
<S> <C> <C> <C> <C>
Sales .............................. $ 73,250 $ 69,278 $ 262,748 $ 207,834
Cost of sales ...................... 18,261 20,110 51,833 60,329
----------- ----------- ----------- ------------
Gross Margin ............... 54,989 49,168 210,915 147,505
Operating Expenses
General and Administrative ......... (83,429) (40,705) (305,920) (122,116)
Other Income (Expense)
Interest expense ................... (8,025) (1,071) (10,332) (3,212)
Interest income .................... -- 27 -- 82
Realized loss on sale of investments -- -- (32,859) --
Gain (loss) on sale of assets ...... -- (45) 2,780 (45)
----------- ----------- ----------- ------------
Income (loss) before income taxes .. (36,465) 7,374 (135,416) 22,214
Income taxes ....................... 200 200 600 600
----------- ----------- ----------- ------------
Net Income (Loss) .................. $ (36,665) $ 7,174 $ (136,016) $ 21,614
=========== =========== =========== ============
Earnings (Loss) Per Share .......... $ (0.01) $ 0.00 $ (0.02) $ 0.00
=========== =========== =========== ============
Weighted Average Shares Outstanding 6,908,671 6,720,649 6,853,267 6,720,649
=========== =========== =========== ============
</TABLE>
See accompanying notes and accountants' report.
<PAGE>
PHOENIX MEDIA GROUP, LTD.
STATEMENTS OF CASH FLOW
For the For the
Nine Nine
Months Months
Ended Ended
March 31, March 31,
2000 1999
--------- ---------
Cash Flows From Operating Activities:
Net income (loss) .................................... $(136,016) $ 21,614
Adjustments to reconcile Net income (loss)
to net cash provided by (used in)
Operating activities:
Amortization and depreciation .................. 27,250 22,289
(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:
Investments held for sale ...................... -- (57,750)
Accounts payable ............................... 7,468 10,379
Accrued expenses ............................... (5,000) (1,400)
--------- ---------
Net cash used by operating activities ................ (44,219) (4,823)
--------- ---------
Cash Flows From Investing Activities:
Stockholders loans ................................... (1,080) 944
Proceeds From Investments ............................ 24,300 --
Purchase of property and equipment ................... (17,601) (3,421)
--------- ---------
Net cash provided by (used in) investing activities .. 5,619 (2,477)
--------- ---------
Cash Flows From Financing Activities:
Principle payments on debt ........................... (2,841) (328)
Proceeds from capital stock issued ................... 50,000 --
--------- ---------
Net cash provided by (used in) financing activities .. 47,159 (328)
--------- ---------
Net increase (decrease) in
cash and cash equivalents .......................... 8,559 (7,628)
Cash and cash equivalents at beginning of period ..... 2,312 9,563
--------- ---------
Cash and cash equivalents at end of period ........... $ 10,871 $ 1,935
========= =========
Supplemental Disclosure of Cash Flow Information:
Interest .......................................... $ 10,332 $ 3,212
Income taxes ...................................... 800 800
Supplemental Schedule of Non-Cash Investing and Financing Activities: None
See accompanying notes and accountants' report.
<PAGE>
PHOENIX MEDIA GROUP, LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED MARCH 31, 2000
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 March 31, 2000 and for the
three and nine 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 three and
nine 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.
<PAGE>
PHOENIX MEDIA GROUP, LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED MARCH 31, 2000
(CONTINUED)
NOTE 1 - ORGANIZATION AND SUMMARY OF ACCOUNTING POLICIES (Continued)
Earnings (Loss) Per Share
The reconciliations of the numerators and denominators of the basic and
diluted earnings per share ("EPS") computations are as follows:
For the Nine Months Ended March 31, 2000
----------------------------------------
Per Share
Income Shares Amount
---------- ---------- ----------
EPS (Numerator) (Denominator)
Net Loss to
common shareholders $ (136,016) 6,853,267 $ (0.02)
========== ========== ==========
For the Nine Months Ended March 31, 1999
----------------------------------------
Per Share
Income Shares Amount
---------- ---------- ----------
EPS
Net Income to
common shareholders $ 21,614 6,720,649 $ --
========== ========== ==========
Amortization
Intangibles and goodwill are amortized using the straight line method
over five years. Amortization expense related to intangibles and goodwill
totaled $12,750 for each of the nine months ended March 31, 2000 and 1999.
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.
<PAGE>
PHOENIX MEDIA GROUP, LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED MARCH 31, 2000
(CONTINUED)
NOTE 1 - ORGANIZATION AND SUMMARY OF ACCOUNTING POLICIES (Continued)
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.
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 1999 financial
statements to conform with the 2000 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.
<PAGE>
PHOENIX MEDIA GROUP, LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED MARCH 31, 2000
(CONTINUED)
NOTE 1 - ORGANIZATION AND SUMMARY OF ACCOUNTING POLICIES (Continued)
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.
Realized Gains and losses are determined on the basis of specific
identification. During the nine months ended March 31, 2000, sales proceeds and
gross realized losses on securities classified as trading securities were
$24,300 and $32,859, respectively.
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 - 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 $111,000 and $67,000 for the nine months ended
March 31, 2000 and 1999 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 March 31,
--------------------
2000 1999
--------- ---------
Future deductible temporary differences related to
Reserves, accruals, and net operating losses $ 111,000 $ 67,000
Valuation allowance (111,000) (67,000)
--------- ---------
Net Deferred Income Tax $ -- $ --
========= =========
<PAGE>
PHOENIX MEDIA GROUP, LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED MARCH 31, 2000
(CONTINUED)
NOTE 3 - INCOME TAXES (Continued)
As of March 31, 2000, the Company had a net operating loss ("NOL")
carry forward for income tax reporting purposes of approximately $325,000
available to offset future taxable income. This net operating loss carry forward
expires at various dates between June 30, 2001 and 2015. 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 $111,000 as of March 31, 2000. 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 March 31,
--------------------
2000 1999
-------- --------
Expense (Benefit) at the federal statutory rate of 34% . $(46,000) $ 7,000
Nondeductible expenses ................................. -- --
-------- --------
Utilization of net operating loss carryforward ......... $ 46,000 $ (7,000)
-------- --------
$ -- $ --
======== ========
NOTE 4 - RELATED PARTY TRANSACTIONS
The Company has 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 nine months ended March 31, 2000, the Company loaned an
additional funds. The balance due at March 31, 2000 was $19,512
<PAGE>
PHOENIX MEDIA GROUP, LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED MARCH 31, 2000
(CONTINUED)
NOTE 5 - LONG-TERM DEBT
Long-term debt consists of the following:
March 31, June 30,
---------- ----------
2000 1999
---------- ----------
Mortgage payable with interest at 8.75%,
payable monthly $393.36, due March 22,
2003, collateralized by deed of trust ............... $ 48,353 $ 48,707
Note Payable with interest at 4.90%,
payable monthly $398.81, due July 15, 2004 ......... 18,714 --
---------- ----------
Less Current Maturities .............................. 4,612 477
---------- ----------
Net Long-term Debt ................................... $ 62,455 $ 48,230
========== ==========
Annual principal payments on long-term debt are as follows:
2000 $ 3,217
2001 4,633
2002 4,886
2003 5,154
2004 3,333
------------------
thereafter $ 45,844
==================
<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-QSB, 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.
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. At the present time, approximately twelve percent of
customers with six month contracts renew their contracts while approximately
twenty percent of customers with three month contracts renew their contracts.
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.
The Company produces a weekly radio talk show which it produces in its
Burbank offices. The Company purchases air time from four radio stations and
resells the air time to customers seeking to advertise their goods and services
during the program. The Company has been producing its radio show for over two
years. The companies which sponsor the talk show through their purchase of air
time can play their own previously produced commercials or have the Company
provide the commercial for broadcast during the show.
Results of Operations - The following table set forth, for the three and nine
months ended March 31, 2000 and 1999, certain items from the Company's Condensed
Statements of Operations expressed as a percentage of net sales.
3 months 3 months 9 months 9 months
ended ended ended ended
03/31/00 03/31/99 03/31/00 03/31/99
------- ------- ------- -------
Sales, Net ............................. 100.0% 100.0% 100.0% 100.0%
Cost of Sales .......................... 24.9% 29.0% 19.7% 29.0%
Gross Margin ........................... 75.1% 71.0% 80.3% 71.0%
Operating Expenses ..................... 113.9% 58.8% 116.4% 158.8%
Operating Income (Loss) ................ -38.8% 12.2% -36.1% 12.2%
Other Income (Expense), Net ............ -11.0% -1.6% -15.4% -1.5%
<PAGE>
Income (Loss) Before Income Taxes ...... -49.8% 10.6% -51.5% 10.7%
Income Taxes ........................... 0.3% 0.2% 0.3% 0.3%
Net Income (Loss) ...................... -50.1% 10.4% -51.8% 10.4%
Net Sales
Net sales for the nine months ended March 31, 2000 compared to the nine
months ended March 31, 1999 increased by approximately $55,000 or 26.4%. 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 the nine months ended
March 31, 2000 as compared to two stations in the nine months ended March 31,
1999. For the three month period ended March 31, 2000, revenues were
approximately $73,000 as compared to approximately $69,000 for the three month
period ended March 31, 1999 and is also attributable to the Company's increased
sales and marketing efforts.
Cost of Sales
Cost of sales for the nine months ended March 31, 2000 decreased
approximately $8,000 or 13.3% compared to the nine months ended March 31, 1999.
As a percentage of sales, cost of sales decreased 9.3% from 29.0% to 19.7%. This
decrease was due to the purchase of additional air time at reduced costs. For
the three month period ended March 31, 2000, costs of sales as a percentage of
sales decreased 4.1% to 24.9%, down from 29.0% for the three month period ended
March 31, 1999. This decrease is attributable to decreases in air time costs
during this, 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 completes 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 the nine months ended March 31, 2000
increased approximately $184,000 or 1.5% compared to the nine months ended March
31, 1999, from approximately $122,000 to $305,000. As a percentage of sales,
operating expenses increased 57.6% from 58.83% to 116.4%. For the three month
period ended March 31, 2000, operating costs were approximately $83,000 compared
to approximately $41,000 for the three month period ended March 31, 1999. 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.
<PAGE>
Liquidity and Capital Resources
The Company requires working capital to fund its current operations.
The Company has budgeted its anticipated revenue and cash flows, after paying
expenses, from its sale of radio air time to provide for its anticipated
expenditures to fund development of the Manfred Moose(TM) project until such
time as the Company begins to receive revenue from Manfred Moose(TM) projects.
If the Company's revenues decline below present or projected levels, the Company
may have to scale back its operations and its proposed development of Manfred
Moose(TM) to accommodate the resulting shortfall in revenues to fund its
projects. During the nine months ended March 31, 2000, the Company's revenues
increased approximately $55,000 over revenues from the nine months ended March
31, 1999. For the three months ended March 31, 2000, the Company's revenues have
increased by approximately $4,000 over the same period during the prior year. 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 over the next twelve
months. The Company anticipates that ultimately, these development costs will be
recouped through the eventual sales of the various products being developed. If
revenues are not sufficient to fund its operations, the Company will need to
seek alternative sources of financing either through loans or through raising
capital. There are no formal commitments from banks or other lending sources for
lines of credit or similar short-term borrowing. There can be no assurances that
the Company will be able to obtain alternative financing through loans or
capital and the Company has no commitments for either type of financing. If
alternative financing is not available, then the Company will be forced to scale
back its proposed operations and perhaps be forced to abandon its Manfred
Moose(TM) projects or delay it significantly. The Company's lack of current
assets would be a factor to be considered by potential lenders or investors in
deciding whether or not to loan money to or invest in the Company.
During the nine months ended March 31, 2000, the Company sold $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. Also during the nine months ended March 31,
2000, the company issued 160,000 shares of the Company's Common Stock in
exchange for services. The loss on sale of investments and expense due to the
issuance of stock for services make up approximately $65,000 of the Company loss
before taxes of approximately $136,000 for the nine month period ended March 31,
2000 compared to a net profit before taxes of approximately $22,000 for the nine
month period ending March 31, 1999.
For the nine month period ended March 31, 2000, the Company's asset
value of vehicles rose to $34,173 compared to $15,200 for the nine month period
ended March 31, 1999. 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 the nine months ended March 31,
2000, operating activities used cash of
<PAGE>
approximately $44,000 as compared to net cash used of approximately $5,000 for
the nine months ended March 31, 1999. Much of this increase in attributable to
the Company's development and marketing of Manfred Moose(TM).
During the nine months ended March 31, 2000, investing activities
provided approximately $6,000 primarily due to the proceeds from the sale of
investments of approximately $24,000, reduced by the cash used in the
acquisition of approximately $18,000 of property and equipment. During the nine
months ended March 31, 1999, investing activities used approximately $2,000
primarily due to the purchase of property and equipment.
Financing activities provided approximately $47,000 primarily from the
sale of the Company's Common Stock for $50,000, reduced by principal payments on
debt of approximately $3000, during the nine months ended March 31, 2000. During
the nine months ended March 31, 1999, financing activities used less than $1000
for principal payments on debt.
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 during the three months ended March 31, 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 filing
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:
<PAGE>
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.
PART II - OTHER INFORMATION
Item 1. 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 2. Changes in Securities
The following table lists all sales of unregistered securities by the
Company during the past three months.
Name # of Shares Exemption Type of Purchaser Value/
Share
Bristol 50,000 4(2) (not involving a public offering) Affiliate $1.00
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. The investors were asked about prior investment history,
business experience and educational background. After reviewing that
information, these investors were determined to be capable of making an informed
investment decision based upon this information. All were informed as to the
restricted nature of the stock being received and all represented and warranted
that they were purchasing the stock for their own account.
The price of the issuance was the price negotiated between the Company and the
investor.
<PAGE>
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
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 to the Registrant's registration statement on
Form 10-SB (as amended) filed on May 2, 2000.
(b) The Company did not filed a report on Form 8-K during the most
recent quarter ended.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Phoenix Media Group, Ltd.
DATE: May 11, 2000
By: /s/
----------------------------
Ronald R. Irwin, President
(Principal Executive and
Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE SHEET OF PHOENIX MEDIA GROUP, LTD AS OF MARCH 31, 2000 AND THE RELATED
STATEMENTS OF OPERATIONS AND CASH FLOWS FOR THE NINE MONTHS THEN ENDED AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
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<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-END> MAR-31-2000
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