<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------
FORM 10-QSB
/X/ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
or
/ / Transition Report Under Section 13 or 15(d) of the Securities
Exchange Act of 1934.
Commission file number 333-07727
TAKEOUTMUSIC.COM HOLDINGS CORP.
(Exact name of small business issuer as specified in its charter)
Washington 98-0138706
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
381 Broadway, Suite 201
New York, New York 10013
(Address of principal executive offices)
(212) 871-0714
(Issuer's telephone number)
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
Number of shares of common stock, par value
$.01 per share, outstanding as of November 10, 2000: 12,813,010 shares
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
<PAGE>
TAKEOUTMUSIC.COM HOLDINGS CORP.
FORM 10-QSB
INDEX
PART I - FINANCIAL INFORMATION
Item 1. - Financial Statements
Condensed Consolidated Balance Sheets as of September 30, 2000
and December 31, 1999
Condensed Consolidated Statements of Operations for the nine
months ended September 30, 2000 and for the periods from
inception (April 12, 1999) through September 30, 1999 and
September 30, 2000
Condensed Consolidated Statements of Operations for the three
months ended September 30, 2000 and September 30, 1999
Condensed Consolidated Statement of Stockholders' Equity for
the period from inception (April 12, 1999) through September
30,2000
Condensed Consolidated Statements of Cash Flows for the nine
months ended September 30, 2000 and for the periods from
inception (April 12, 1999) to September 30, 1999 and September
30, 2000
Notes to Financial Statements
Item 2. - Management's Discussion and Analysis and Plan of Operations
PART II - OTHER INFORMATION
Item 2. - Changes in Securities
Item 4. - Submission of Matters to a Vote of Security Holders
Item 6. - Exhibits and Reports on Form 8-K
SIGNATURE
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. - Financial Statements
takeoutmusic.com Holdings Corp.
(a development stage company)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS September 30, December 31,
2000 1999
----------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 561,604 $ 1,105,898
Certificate of deposit -- 300,000
Other current assets 104,678 39,244
----------- -----------
Total current assets 666,282 1,445,142
FIXED ASSETS, net 113,512 81,619
OTHER ASSETS 5,707 5,707
----------- -----------
Total assets $ 785,501 $ 1,532,468
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 128,175 $ 92,514
Notes payable 42,500 --
Obligations under capital leases - current portion 12,439 12,869
Deferred revenue 667 --
----------- -----------
Total current liabilities 183,781 105,383
OTHER LIABILITIES
Notes payable to shareholders 183,000 --
Obligations under capital leases, less current portion -- 9,033
----------- -----------
Total other liabilities 183,000 9,033
----------- -----------
Total liabilities 366,781 114,416
STOCKHOLDERS' EQUITY
Common stock, $0.01 par value; authorized 100,000,000 shares; issued
12,813,010 and 10,046,344 shares, respectively 128,129 100,464
Additional paid-in capital 1,767,814 1,643,579
Accumulated deficit during development stage (1,477,223) (325,991)
----------- -----------
Total stockholders' equity 418,720 1,418,052
----------- -----------
Total liabilities and stockholders' equity $ 785,501 $ 1,532,468
=========== ===========
</TABLE>
The accompanying notes are an integral part of these balance sheets.
<PAGE>
takeoutmusic.com Holdings Corp.
(a development stage company)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the periods from inception
For the nine (April 12, 1999) through
months ended ------------------------------
September 30, September 30, September 30,
2000 1999 2000
------------- ------------- -------------
<S> <C> <C> <C>
REVENUE $ 27,993 $ -- $ 27,993
OPERATING EXPENSES:
General and administration 819,698 21,240 993,355
Selling and marketing 196,096 16,137 259,867
Business development 191,089 11,827 235,643
------------ ------------ ------------
Total operating expenses 1,206,883 49,204 1,488,865
------------ ------------ ------------
Loss from operations (1,178,890) (49,204) (1,460,872)
INTEREST INCOME 27,658 120 35,350
------------ ------------ ------------
Loss before provision for income taxes (1,151,232) (49,084) (1,425,522)
PROVISION FOR INCOME TAXES -- -- --
------------ ------------ ------------
Net loss $ (1,151,232) $ (49,084) $ (1,425,522)
============ ============ ============
LOSS PER SHARE (BASIC AND DILUTED) $ (0.09) $ (0.01) $ (0.15)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING (BASIC AND
DILUTED) 12,290,484 5,941,668 9,362,863
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
takeoutmusic.com Holdings Corp.
(a development stage company)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the three months ended
-------------------------------
September 30, September 30,
2000 1999
-------------- --------------
<S> <C> <C>
REVENUE $ 14,749 $ --
OPERATING EXPENSES:
General and administration 214,239 21,240
Selling and marketing 36,903 16,137
Business development 103,526 10,149
------------ ------------
Total operating expenses 354,668 47,526
------------ ------------
Loss from operations (339,919) (47,526)
INTEREST INCOME 7,851 120
------------ ------------
Loss before provision for income taxes (332,068) (47,406)
PROVISION FOR INCOME TAXES -- --
------------ ------------
Net loss $ (332,068) $ (47,406)
============ ============
LOSS PER SHARE (BASIC AND DILUTED) $ (0.03) $ (0.01)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING (BASIC AND DILUTED) 12,724,242 6,600,003
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
takeoutmusic.com Holdings Corp.
(a development stage company)
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM INCEPTION (APRIL 12, 1999) THROUGH SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
Accumulated
Common stock Additional deficit during
------------------------ paid-in development
Shares Amount capital stage Total
---------- ----------- ----------- -------------- -----------
<S> <C> <C> <C> <C> <C>
Balance at April 12, 1999 -- $ -- -- $ -- $ --
Issuance of stock to founders, April 12,
1999 5,750 58 -- (8) 50
Stock Split - 900 to 1 5,169,250 51,693 -- (51,693) --
Proceeds from issuance of common
stock in connection with private
placement, net of issuance costs
of $15,668 1,725,004 17,250 77,082 -- 94,332
Proceeds from issuance of common
stock in connection with private
placement, net of issuance costs
of $263,508 3,146,340 31,463 1,528,997 -- 1,560,460
Issuance of stock options to consultants
for services rendered -- -- 37,500 -- 37,500
Net loss for the year ended
December 31, 1999 -- -- -- (274,290) (274,290)
---------- ----------- ----------- ----------- -----------
Balance at December 31, 1999 10,046,344 100,464 1,643,579 (325,991) 1,418,052
Issuance of common stock in
connection with merger 2,438,889 24,388 (299,077) -- (274,689)
Exercise of warrants, March 15, 2000 94,444 944 47,931 -- 48,875
Exercise of warrants, August 4, 2000 233,333 2,333 9,334 -- 11,667
Charge to operations for exercise of
warrants by consultant -- -- 101,250 -- 101,250
Issuance of stock options to suppliers
and consultants for goods and
services rendered -- -- 264,797 -- 264,797
Net loss for the nine months ended
September 30, 2000 -- -- -- (1,151,232) (1,151,232)
---------- ----------- ----------- ----------- -----------
Balance at September 30, 2000 12,813,010 $ 128,129 $ 1,767,814 $(1,477,223) $ 418,720
---------- ----------- ----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these statements
<PAGE>
takeoutmusic.com Holdings Corp.
(a development stage company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the periods from inception
For the nine (April 12, 1999) through
months ended ------------------------------
September 30, September 30, September 30,
2000 1999 2000
------------- ------------- -------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(1,151,232) $ (49,084) $(1,425,522)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization 31,420 1,908 37,464
Non-cash compensation expense 335,849 335 339,037
Changes in operating assets and liabilities:
Accounts receivable (6,000) -- (6,000)
Other assets (29,235) (5,250) (39,874)
Accounts payable and accrued expenses 2,975 26,238 95,489
Deferred revenue 667 -- 667
----------- ----------- -----------
Net cash used in operating activities (815,556) (25,853) (998,739)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease in short term investments 300,000 -- --
Capital expenditures (17,916) (28,018) (79,409)
Capitalization of web-site development costs (45,400) (18,830) (71,570)
Cash acquired in merger 8,499 -- 8,499
----------- ----------- -----------
Net cash provided by (used in) investing activities 245,183 (46,848) (142,480)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Reduction in notes payable (25,000) -- (25,000)
Net changes in obligations under capital leases (9,463) -- 12,439
Capital contributions on initial capitalization -- 50 50
Proceeds from exercise of warrants 60,542 -- 60,542
Proceeds from private placement -- 94,332 1,654,792
----------- ----------- -----------
Net cash provided by financing activities 26,079 94,382 1,702,823
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIALENTS (544,294) 21,681 561,604
CASH AND CASH EQUIVALENTS, beginning of period 1,105,898 -- --
----------- ----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 561,604 $ 21,681 $ 561,604
=========== =========== ===========
Supplemental disclosure of cash flow information: Non-cash
investing and financing activities:
Net liabilities assumed in merger $ 274,689 $ -- $ 274,689
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
takeoutmusic.com Holdings Corp.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
1. THE COMPANY
takeoutmusic.com Holdings Corp. (the "Company"), a Washington corporation, was
incorporated on December 28, 1993. On February 4, 2000, the Company acquired all
of the outstanding common stock of takeoutmusic.com, Inc. ("takeoutmusic.com").
For accounting purposes, the acquisition has been treated as a recapitalization
of takeoutmusic.com with takeoutmusic.com as the acquirer. The historical
financial statements prior to February 4, 2000, are those of takeoutmusic.com,
which was incorporated on April 12, 1999. See note 4 for a more complete
description of this merger.
The Company is in the development stage and is engaged in the business of
providing internet and traditional marketing services involving the promotion of
music, entertainment and youth lifestyle products for third party companies.
These marketing campaigns are designed to raise the visibility of client's
products, spark the interest of consumers and ultimately drive sales of the
products. The Company is also developing music-based websites in support of its
marketing programs. The websites will be primarily content oriented and will
also offer music and lifestyle products for sale, including recordings by direct
file transfer over the internet using a licensed industry supported technology.
The Company operates within one industry segment.
Based on reductions in operating expenses attributable to certain
non-recurring expenditures in connection with the merger in February 2000 and
additional reductions in operating expenses that may be implemented, if
necessary, the Company believes its cash on hand and cash generated from
operations will be sufficient to continue operations through the third quarter
of 2001. However, the Company's projections of future cash needs and cash flows
may differ from actual results. The Company has been advised by its independent
public accountants that if the Company does not demonstrate its ability to
generate funds sufficient to continue operations through the end of 2001 prior
to the completion of their audit of the Company's financial statements for the
year ended December 31, 2000, their auditor's report may be modified to reflect
the uncertainty related to the Company's ability to fund planned operations
through the year 2001.
2. BASIS OF PRESENTATION
In the opinion of management, the unaudited consolidated condensed financial
statements included herein have been prepared on a basis consistent with prior
periods reported financial statements and include all material adjustments,
consisting of normal recurring adjustments, necessary to fairly present the
information set forth therein.
Certain information and footnote disclosures normally included in the financial
statements have been condensed or omitted pursuant to rules and regulations of
the Securities and Exchange Commission, although the Company believes that the
disclosures in the unaudited interim financial statements are adequate to ensure
that the information presented is not misleading. The results of operations for
the interim reporting periods presented herein are not necessarily indicative of
any future operating results.
The financial information as of December 31, 1999 is derived from the Company's
Current Report on Form 8-K for the period from inception (April 12, 1999) to
December 31, 1999 as filed with the Securities Exchange Commission and the
Company's Annual Report on Form 10KSB for the year
<PAGE>
takeoutmusic.com Holdings Corp.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
ended December 31, 1999. The interim financial statements presented herein
should be read in conjunction with the financial statements and the notes
thereto included in the Form 10-KSB and the Form 8K.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ materially from those estimates.
Certain prior period amounts have been reclassified to conform with the current
period presentation.
3. NET LOSS PER COMMON SHARE
The weighted average shares used to compute basic net loss per share include
outstanding shares of common stock from the date of issuance. The calculation of
diluted net loss per share for all periods presented excludes shares of common
stock issuable upon exercise of stock options and warrants, as their effect
would be antidilutive. Therefore, the weighted average number of shares used in
the calculation of basic and dilutive net loss per common share is the same.
As of September 30, 2000, the Company had an aggregate of 1,897,781 shares of
common stock issuable upon the exercise of stock options and warrants.
Comprehensive Net Loss
There are no differences between the Company's net loss as reported for any of
the periods reported herein and the Company's comprehensive loss, as defined by
Statement of Financial Accounting Standards No. 130, for each of these
respective periods.
4. MERGER WITH SHAMPAN LAMPORT HOLDINGS LIMITED
On February 4, 2000, TOMCI Acquisition Corp., a Delaware corporation and a
wholly owned subsidiary of Shampan Lamport Holdings Limited ("Shampan" or the
"Company"), a Washington corporation, merged (the "Merger") with and into
takeoutmusic.com, Inc., a Delaware corporation ("takeoutmusic.com"), pursuant to
an Agreement and Plan of Merger dated January 26, 2000 (the "Merger Agreement").
takeoutmusic.com was the surviving corporation in the Merger. In connection with
the Merger, Shampan changed its name to takeoutmusic.com Holdings Corp.
Pursuant to the terms of the Merger Agreement, Shampan issued 10,046,344 shares
of its authorized but previously unissued common stock to the former holders of
takeoutmusci.com common stock based on a conversion ratio of 1.15 shares of
Shampan's common stock for each share of takeoutmusic.com common stock issued
and outstanding as of the effective time of the Merger. The shares issued to the
former takeoutmusic.com stockholders represent approximately 80.5% of the
outstanding common stock of Shampan following the Merger, and the shareholders
of Shampan prior to the Merger represent approximately 19.5% of the outstanding
common stock of Shampan following the Merger. The Merger was accounted for as a
capital transaction which is equivalent to the issuance of stock by
takeoutmusic.com for Shampan's net liabilities of approximately $275,000,
accompanied by a recapitalization of takeoutmusic.com. All
<PAGE>
takeoutmusic.com Holdings Corp.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
share and per share information included in these financial statements has been
adjusted to retroactively reflect the recapitalization.
In addition, all outstanding options and warrants to purchase takeoutmusic.com
common stock were converted into options and warrants to purchase common stock
of Shampan. The sole outstanding warrant to purchase an aggregate of 273,598
shares of takoutmusic.com common stock at an exercise price of $0.67 was
converted into a warrant to purchase an aggregate of 314,638 shares of Shampan
common stock at an exercise price of $0.58. takeoutmusic.com incentive stock
options to purchase an aggregate of 783,000 shares of takeoutmusic.com common
stock at an exercise price of $.067 per share were converted into options to
purchase 900,450 shares of Shampan common stock at an exercise price of $0.58
per share.
In addition, the 1999 Incentive Compensation Plan to grant options to purchase
takeoutmusic.com common stock was converted into the 1999 Incentive Plan to
purchase common stock of Shampan.
5. NOTES PAYABLE
(a) Notes Payable to Shareholder
September 30, 2000
------------------
Note payable to Shareholder (i) 128,000
Note payable to Shareholder (ii) 55,000
-------
183,000
-------
(i) Note payable to Shareholder - On February 13, 1997 the Company
issued a note payable in connection with a proposed private
placement of debt securities in the amount of $750,000. The
Company was advanced the sum of $100,000 under the Note. The
Note is secured by the assets of the Company and bore interest
at 10% per annum. On February 3, 2000 the Note was amended to
include accrued interest through December 31, 1999 of $28,000;
commencing six months from the closing of the Merger, the
automatic conversion into common stock at $3.50 per share, if
the market price of the common stock is equal to or in excess
of $7 per share for a period of 10 consecutive trading days;
and accrue interest at 8% per annum payable on conversion or
maturity. If not converted, the Note matures three years from
the closing date of the Merger.
(ii) Note payable to Shareholder - On May 1, 1998, the Company
issued a note payable in connection with the receipt of
$50,000. The Note is unsecured and bears interest at the fixed
rate of 10% per annum. The Shareholder advanced the further
sum of $5,000 in 1999. On July 31, 1999, the Shareholder
agreed not to accrue interest thereafter on the Note. On
February 3, 2000, the Note was amended to include, commencing
six months from the closing of the Merger, the automatic
conversion into common stock at $3.50 per share, if the market
price of the common stock is equal to or in excess of $7.00
per share for a period of 10 consecutive trading days. If not
converted the Note matures three years from the closing date
of the Merger.
<PAGE>
takeoutmusic.com Holdings Corp.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
Both of the above notes include a beneficial conversion feature that will result
in an interest charge if and when the price of the Company's stock exceeds $7.00
per share. Such charge will be imputed based on the difference between $3.50 and
the then current fair value of the Company's stock.
(b) Note Payable
September 30, 2000
------------------
Note payable 42,500
------
Note payable, due November 4, 1998. The Note is unsecured and non- interest
bearing.
6. CONTINGENCIES
The Company entered into a two-year contract with a consultant in June 2000 and
agreed to issue 50,000 shares of common stock and options to purchase 100,000
shares of common stock, which were to vest over the term of the contract. The
contract was subsequently terminated in the third quarter, prior to the issuance
of the shares or the vesting of any of the options. The Company is currently
negotiating with the consultant to agree on a settlement and does not expect
that the outcome will have a material adverse impact on the financial statements
of the Company.
<PAGE>
Item 2. - Management's Discussion and Analysis and Plan of Operations
Forward-Looking Statements
All statements contained herein (other than historical facts)
including, but not limited to, statements regarding the Company's future
development plans, the Company's ability to generate cash from its operations
and any losses related thereto, are based upon current expectations. These
statements are forward-looking in nature and involve a number of risks and
uncertainties. Actual results may differ materially from the anticipated results
or other expectations expressed in the Company's forward-looking statements.
Generally, the words "anticipate," "believe," "estimate," "expects," and similar
expressions as they relate to the Company and/or its management, are intended to
identify forward-looking statements. Among the factors that could cause actual
results to differ materially are the following: the inability of the Company to
obtain additional financing to meet its capital needs and general business and
economic conditions as well as technological developments.
Overview
The Company has a limited history of operations and no history of
profitability. It was incorporated as Allegiant Technologies Inc. on December
28, 1993 and thereafter until the cessation of operations developed for sale
various software products primarily for the Macintosh platform. On May 31, 1998
the Company sold its technology assets and product inventory to an arms length
purchaser, commenced a reorganization of its capital and thereafter remained
dormant in search of a new line of business.
On December 9, 1999 the Company announced and reported on Form 8-K that
it entered into a letter of intent to merge with takeoutmusic.com, Inc. The
merger was completed on February 4, 2000. In connection with the merger the
Company changed its name to takeoutmusic.com Holdings Corp. For accounting
purposes, the merger has been treated as a recapitalization of takeoutmusic.com,
Inc. with takeoutmusic.com, Inc. as the acquirer. The historical financial
statements prior to February 4, 2000, are those of takeoutmusic.com, Inc., which
was incorporated on April 12, 1999.
The Company is in the development stage and is engaged in the business
of providing internet and traditional marketing services involving the promotion
of music, entertainment and youth lifestyle products for third party companies.
These marketing campaigns are designed to raise the visibility of client's
products, spark the interest of consumers and ultimately drive sales of the
products. The Company is also developing music-based websites in support of its
marketing programs. The websites will be primarily content oriented and will
also offer music and lifestyle products for sale, including recordings by direct
file transfer over the internet using a licensed industry supported technology.
As of September 30, 2000 the Company had a total accumulated deficit of
approximately $1,477,000.
In reviewing Management's Discussion and Analysis and Plan of
Operations, please refer to the Company's Financial Statements and the notes
thereto included elsewhere in this Form 10-QSB and in the Company's Current
Report on Form 8-K for the period from inception (April 12, 1999) to December
31, 1999 and the Company's Annual Report on Form 10KSB for the year ended
December 31, 1999.
Results of Operations
The level of expenditures incurred by the Company in its efforts to
develop its business has been subject to the availability of funding. As of
September 30, 1999, the Company had raised approximately $94,000 of equity
funding and had incurred only minimal expenditures through that date. The
Company's accelerated level of development efforts in 2000 was made possible by
the receipt of net proceeds of approximately $1,560,000 in the fourth quarter of
1999, in connection with the sale of common stock in a private placement.
<PAGE>
General and administration, selling and marketing, and business
development expenses increased for the nine months ended September 30, 2000 to
approximately $820,000, $196,000 and $191,000, respectively, from approximately
$21,000, $16,000 and $12,000, respectively, for the 1999 period. General and
administrative, selling and marketing, and business development expenses for the
three month 2000 period increased to approximately $214,000, $37,000 and
$104,000, respectively, from approximately $21,000, $16,000 and $10,000,
respectively, for the comparable 1999 period.
The Company had no revenue in 1999, compared to revenue of
approximately $28,000 and $15,000, respectively, for the nine and three months
ended September 30, 2000. The increase in interest income for the nine and three
month 2000 periods to approximately $28,000 and $8,000, respectively, from the
1999 periods of less than $1,000 is a result of interest earned on the proceeds
from the private placement received in the fourth quarter of 1999.
Liquidity and Capital Resources
As of September 30, 2000 the Company had a cash balance of
approximately $562,000, down from a total of approximately $1,406,000 of cash
and short-term investments at December 31, 1999. Working capital decreased from
the calendar 1999 year-end total of approximately $1,340,000, to approximately
$483,000 as of September 30, 2000. The Company's total accumulated deficit also
rose from the 1999 year-end balance of approximately $326,000 to approximately
$1,477,000 at September 30, 2000, which amounts included charges to operations
for non-cash compensation expense of approximately $3,000 and $339,000,
respectively.
The $183,000 included in Company long-term debt is represented by two
notes, one for $128,000, with interest at 8%, and one for $55,000, without
interest. Both notes mature on February 3, 2003. Both notes, however,
automatically convert into common stock at $3.50 per share (requiring the
issuance of 52,285 shares) if the market price of the common stock is $7.00 per
share or more for a period of ten consecutive trading days.
Since its inception (April 12, 1999), the Company has met its
liquidity and capital expenditure needs primarily from the proceeds of sales of
common stock in private placements and upon exercise of warrants. In addition,
during the nine months ended September 30, 2000, the Company received proceeds
aggregating approximately $23,000 in payments from customers for goods and
services provided.
Based on reductions in operating expenses attributable to certain
non-recurring expenditures in connection with the merger in February 2000 and
additional reductions in operating expenses that may be implemented, if
necessary, the Company believes its cash on hand and cash generated from
operations will be sufficient to continue operations through the third quarter
of 2001. However, the Company's projections of future cash needs and cash flows
may differ from actual results. The Company has been advised by its independent
public accountants that if the Company does not demonstrate its ability to
generate funds sufficient to continue operations through the end of 2001 prior
to the completion of their audit of the Company's financial statements for the
year ended December 31, 2000, their auditor's report may be modified to reflect
the uncertainty related to the Company's ability to fund planned operations
through the year 2001.
The Company is presently contemplating a private placement of equity
securities to facilitate funding of its development efforts at an accelerated
pace. The sale of additional equity securities or convertible debt could result
in dilution to the Company's stockholders. No assurance can be given that the
Company will be able to generate adequate funds from operations, that funds will
be available to the Company from debt or equity financings, or that if
available, the Company will be able to obtain such funds on favorable terms and
conditions. The Company currently has no definitive arrangements with respect to
additional financing.
<PAGE>
PART II - OTHER INFORMATION
Item 2. - Changes in Securities
On August 4, 2000, 233,333 shares of common stock were issued upon
exercise of warrants to purchase shares of common stock at an exercise price of
$.05 per share. The issuance of the above shares were deemed to be exempt from
registration under the Securities Act in reliance on Sections 4(2) and 4(6) as
transactions not involving a public offering.
Item 4. - Submission of Matters to a Vote of Security Holders
(a) The Company held an Annual Meeting of Stockholders on September 27,
2000.
(b) The directors elected at the meeting were:
Mori S. Ninomiya
John Lavallo
Edwin O'Loughlin
Steven A. Saltzman
(c) The matters voted on at the meeting were the election of directors
and the approval of the Company's 1999 Incentive Compensation Plan.
The votes on each of these items were as follows:
Election of Directors
---------------------
For Withheld
Mori S. Ninomiya 6,916,989 60,880
John Lavallo 6,916,989 60,880
Edwin O'Loughlin 6,916,989 60,880
Steven A. Saltzman 6,916,989 60,880
Approval of 1999 Incentive Compensation Plan
--------------------------------------------
For Against Abstention
6,830,714 60,905 86,250
Item 6. - Exhibits and Reports on Form 8-K
(a) Exhibits
27 - Financial Data Schedule
(b) Reports on Form 8-K
No current report on Form 8-K was filed for the Company during the
quarter ended September 30, 2000.
<PAGE>
SIGNATURE
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.
takeoutmusic.com Holdings Corp.
Dated: November 14, 2000 By: /s/ Mori S. Ninomiya
----------------------------------
Mori S. Ninomiya
President and Chief Executive Officer
