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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
OR
/ / Transition report under section 13 or 15 (d) of the Securities Exchange Act
of 1934 for the transition period from _______________ to _______________
Commission file number 0-25159
PLENUM COMMUNICATIONS, INC.
(Name of Small Business Issuer in its charter)
Minnesota 91-1524747
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
2201 Lind Avenue SW, Suite 200, Renton, WA 98055
(Address of principal executive offices) (Zip code)
(425) 902 - 4140
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15 (d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes ( X ) No ( )
As of May 8, 2000, approximately 32,753,253 shares of the Company's common stock
were outstanding.
1
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Plenum Communications, Inc. and Subsidiary
Form 10 - QSB
For the Quarter Ended March 31, 2000
<TABLE>
<CAPTION>
PAGE
NUMBER
<S> <C> <C>
INDEX
PART I FINANCIAL INFORMATION
Item 1 Financial Statements
Consolidated Balance Sheets at March 31, 2000 (unaudited) and December 31, 1999 3
Consolidated Statements of Operations for the three months ended March 31,
2000 and 1999 (unaudited) 4
Consolidated Statements of Cash Flows for the three months ended March 31,
2000 and 1999 (unaudited) 5
Notes to Consolidated Financial Statements 6
Item 2 Management's Discussion and Analysis of Financial Condition and Results of
Operations 7
PART II OTHER INFORMATION
Item 2 Changes in Securities and Use of Proceeds 11
Item 6 Exhibits and Reports on Form 8 - K 12
Signatures 13
</TABLE>
2
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Plenum Communications, Inc. and Subsidiary
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
March 31,
2000 December 31,
(Unaudited) 1999
---------------- ----------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 452,266 $ 368,649
Accounts receivable, less allowance for doubtful accounts of $89,977 and
$148,179 in 2000 and 1999, respectively 413,200 380,547
Prepaid expenses and other 398,731 236,584
---------------- ----------------
Total current assets 1,264,197 985,780
PROPERTY AND EQUIPMENT - net 890,909 981,530
OTHER ASSETS
Goodwill - net 472,334 500,674
Other assets 37,177 37,177
---------------- ----------------
$ 2,664,617 $ 2,505,161
================ ================
LIABILITIES
CURRENT LIABILITIES
Line of credit $ 378,019 $ 587,550
Accounts payable 283,009 434,922
Accrued liabilities 488,602 415,152
Deferred revenue 336,637 289,930
Related party payables 58,122 60,500
---------------- ----------------
Total current liabilities 1,544,389 1,788,054
COMMITMENTS AND CONTINGENCIES - -
STOCKHOLDERS' EQUITY
Preferred stock, par value $.001 per share; authorized
5,000,000 shares; none outstanding - -
Common stock - authorized, 50,000,000 shares of $.001 par value; 32,753 31,416
Additional contributed capital 12,145,884 11,187,120
Notes receivable from stockholders (1,432,188) (1,289,063)
Accumulated deficit (9,626,221) (9,212,366)
---------------- ----------------
1,120,228 717,107
---------------- ----------------
$ 2,664,617 $ 2,505,161
================ ================
</TABLE>
The accompanying notes are an integral part of these statements.
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Plenum Communications, Inc. and Subsidiary
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended March 31,
-----------------------------------------
2000 1999
------------------ -------------------
<S> <C> <C>
Revenues $ 1,542,082 $ 710,278
Expenses
Direct costs 208,187 92,705
Selling and marketing 524,150 349,165
General and administrative 661,449 483,461
Compensation from stock options issued under fair market value 181,260 -
Research and development 222,003 64,172
Depreciation and amortization 111,788 27,344
------------------ -------------------
1,908,837 1,016,847
------------------ -------------------
Operating loss (366,755) (306,569)
Other income (expense)
Interest expense (63,242) (46,345)
Interest income 16,142 9,231
------------------ -------------------
NET LOSS $ (413,855) $ (343,683)
================== ===================
Loss per common share $ (.01) $ (.01)
================== ===================
</TABLE>
The accompanying notes are an integral part of these statements.
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Plenum Communications, Inc. and Subsidiary
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended March 31,
---------------------------------------
Increase (Decrease) in Cash and Cash Equivalents 2000 1999
----------------- ----------------
<S> <C> <C>
Cash flows from operating activities
Net loss $ (413,855) $ (343,683)
Adjustments to reconcile net loss to net cash used in operating
activities
Depreciation and amortization 111,788 27,344
Write - off of software development costs 56,200 -
Interest earned on notes receivable (15,226) -
Interest expense on convertible debentures - 46,156
Warrants issued for services received 10,828 -
Common stock and stock options issued for services received 2,736 44,795
Compensation expense on stock options issued under fair market 181,260 -
value
Changes in assets and liabilities
Accounts receivable (32,653) (23,629)
Prepaid expenses and other (27,809) (66,423)
Accrued liabilities 73,450 35,310
Accounts payable (151,913) 88,072
Deferred revenue 46,707 31,196
----------------- ----------------
Net cash used in operating activities (158,487) (160,862)
Cash flows from investing activities
Capitalized software development costs (48,862) (70,817)
Purchase of property and equipment (165) (33,024)
----------------- ----------------
Net cash used in investing activities (49,027) (103,841)
Cash flows from financing activities
Payments on related party payables (2,378) (26,188)
Payments on line of credit (209,531) -
Proceeds from notes receivable 10,000 -
Proceeds from issuance of common stock and exercise of stock options 20,808 26,250
Proceeds from exercise of warrants 472,232 248,898
----------------- ----------------
Net cash provided by financing activities 291,131 248,960
----------------- ----------------
Net increase (decrease) in cash and cash equivalents 83,617 (15,743)
Cash and cash equivalents at beginning of period 368,649 566,767
----------------- ----------------
Cash and cash equivalents at end of period $ 452,266 $ 551,024
================= ================
Supplemental non-cash investing and financing activities:
Exercise of stock options by notes receivable $ 309,375 $ 12,500
Common stock returned for cancellation of note receivable $ 156,250 $ -
Issuance of warrants for services included in prepaid expense $ 129,940 $ -
Capitalized software costs incurred through accrued liability $ - $ 49,000
</TABLE>
The accompanying notes are an integral part of these statements.
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Plenum Communications, Inc. and Subsidiary
Form 10 - QSB
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. FINANCIAL STATEMENTS
The unaudited consolidated financial statements and related notes are presented
as permitted by Form 10 - QSB, and do not contain certain information included
in the Company's audited consolidated financial statements and notes for the
fiscal year ended December 31, 1999. The information furnished reflects, in the
opinion of management, all adjustments, consisting of normal recurring accruals,
necessary for a fair presentation of the results of the interim periods
presented. The results of operations for the interim periods are not necessarily
indicative of the results to be expected for the entire fiscal year ending
December 31, 2000. The accompanying unaudited consolidated financial statements
and related notes should be read in conjunction with the audited consolidated
financial statements and the Form 10 - KSB of Plenum Communications, Inc. (d/b/a
LION Inc.) and its subsidiary (the "Company") and notes thereto, for its fiscal
year ended December 31, 1999.
NOTE 2. LOSS PER SHARE
Loss per share is based on the average number of shares outstanding during each
period and income available to common stockholders. The weighted average number
of common shares outstanding was 32,192,901 and 25,068,256 for the three months
ended March 31, 2000 and 1999, respectively. The computation for loss per common
share assuming dilution for the three-months ended March 31, 2000 and 1999 was
anti-dilutive, and therefore, is not included.
NOTE 3. ISSUANCE OF SERIES A PREFERRED STOCK
On April 27, 2000, the Company filed a Certificate of Designation with the State
of Minnesota providing for the designation of a series of preferred stock to be
named "Series A Preferred Stock," consisting of 4,782,608 shares for financing
of up to $3,000,000. On May 1, 2000, the Company received $900,000 during "the
first closing" on the issuance of 1.5 million shares of Series A Preferred
Stock. Issue costs totaled approximately $93,000. The Preferred Stock is not
redeemable and one share of Preferred Stock can be converted at the option of
the holder at any time after the date of issuance into one share of Common
Stock. The holder of each share of Series A Preferred Stock has the right to one
vote for each share of Common Stock into which such Preferred Stock could then
be converted. The remaining unissued shares of Series A Preferred Stock totaling
3,282,608 shares may be issued based on a schedule covering 180 days beginning
April 28, 2000. The proceeds from the sale of the Series A Preferred Stock will
be used to payoff certain Company obligations, enhance core products, and
support future Company initiatives.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION.
The following discussion of our financial condition and results of operations
should be read in conjunction with the Financial Statements and the related
Notes included elsewhere in this document.
Except for the historical information contained herein, the matters discussed in
this Form 10 - QSB include forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities Act
of 1934. All statements that look forward in time or include anything other than
statements of historical fact are forward-looking statements. Such statements
are based upon the beliefs of, and information currently available to, our
management, and involve risks and uncertainties that may affect our actual
results of operations. Although we believe that the expectations reflected in
such forward-looking statements are reasonable, we can give no assurance that
such expectations will prove to be correct. Those risks and uncertainties
include but are not limited to: (i) uncertainties of achieving profitability;
(ii) market demand for quality, accurate and timely information on a consistent
basis; (iii) the competitive market for Internet-based services in which we
operate, and uncertainties as to continued end-user acceptance of the Company's
services and products; (iv) dependence on the Internet and current software
standards; (v) dependence on mortgage brokers and the mortgage brokerage
industry; (vi) possible under-capitalization and the need for future financing;
(vii) dependence on hardware and other equipment and services used for system
database security; (viii) the impact of mergers and acquisitions; (ix) the
impact of the Year 2000 related issues; and (x) risks associated with the
introduction of new products and services.
We disclaim any obligation to update any forward-looking statements whether as a
result of new information, future events or otherwise.
OVERVIEW
Our operating subsidiary, Lioninc.com, is one of the leaders in providing
Internet products and services for the mortgage industry. Lioninc.com maintains
an extensive on-line mortgage loan database, automated loan underwriting systems
and other related Internet-based products and services for mortgage brokers and
lenders.
Through its LionPro products and services ("www.lioninc.com"), Lioninc.com
provides wholesale mortgage rate, fee, and program information to over 5,400
mortgage brokers nationwide via the Internet. The Lioninc.com database is
updated daily with new information from over 400 participating lenders (both
conforming and sub-prime) and is available to mortgage brokers through
Lioninc.com's password protected, membership-based Internet service.
Lioninc.com also uses its LionChoice network of sites ("www.lionchoice.com") as
its consumer portal to help mortgage brokers and borrowers use the Internet to
create business-to-consumer relationships. It attracts approximately 500,000
unique visitors per month. Its Mortgage101.com site is listed on 100Hot.com as
one of the higher trafficked web sites on the Internet for loan information. In
addition, Mortgage101 provides consumer education materials to NAMB, the broker
trade association based in Washington D.C. Through LionChoice, we co-brand
electronic mortgage centers for more than 5,000 participating real estate
companies. Our products and services include (i) the development, hosting and
marketing of web sites for mortgage brokers and retail originators, (ii)
technology providing the ability to post interest rates for both conforming and
"sub-prime" loan programs, an online library of mortgage articles, interactive
mortgage calculators, a pre-qualification tool, and an online secure
application, and (iii) providing brokers with marketing opportunities through
our network of consumer mortgage sites.
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In its lender services area, Lioninc.com has developed successful web sites for
some of the nation's leading wholesale lenders and currently hosts 60 of the top
200 wholesale lender web sites. In addition, since mid-1999, Lioninc.com has
provided automated underwriting capabilities via LION-AU through Fannie Mae's
Desktop Originator. This enables brokers who are sponsored by Fannie
Mae-approved lenders the ability to use the Internet to send electronic home
loan applications directly into Fannie Mae for automated underwriting through
"www.lioninc.com/desktoporiginator". As a result, Lioninc.com's subscribing
mortgage brokers can quickly deliver an underwriting decision to the customer.
Lioninc.com is currently developing software applications to support online
wholesale origination and fulfillment services. We refer to this product as
"LoanCat." LoanCat is a fully managed E-commerce solution for lenders. As an
application service provider (ASP) in the business-to-business (B2B) space,
Lioninc.com will customize and host a wholesale lender's web site, as well as
provide the software applications needed to automate a lender's loan pipeline.
LoanCat will allow lenders to provide brokers with web-based tools that
facilitate an efficient and fast loan process. The product will feature
origination applications such as product and pricing search engines, real-time
rate locking capabilities, electronic 1003 manager, loan status monitoring and a
broadcast E-mail center. All of these features will be secured by Lioninc.com's
access-control module. This access feature will provide a complete and secure
E-commerce solution.
Additional revenue sources are derived from ad banner advertisements on the
Lioninc.com Web site.
RESULTS OF OPERATIONS
REVENUES
Revenues increased to $1,542,082 from $710,278 for the three months ended March
31, 2000 and 1999, respectively. This represents an increase of $831,804 or
117%. Total revenues of $1,542,082 for the three months ended March 31, 2000
were comprised of mortgage broker fees (LionPro and LionChoice) of $1,090,764 or
71%, lender fees of $345,704 or 22%, ad banner revenues of $92,459 or 6%, and
broadcast fax fees of $13,155 or 1%. Total revenues of $710,278 for the three
months ended March 31, 1999 were comprised of mortgage broker fees of $517,312
or 73%, lender fees of $136,242 or 19%, ad banner revenues of $33,140 or 5%, and
broadcast fax fees of $23,584 or 3%.
Over 50% of the growth in revenues in the first quarter of 2000 compared to the
same quarter in 1999 is primarily due to the acquisition of the IMark assets and
its mortgage industry Internet sites on May 17, 1999. These LionChoice products
contributed $473,260 of the $831,804 increase in revenues. The remainder of the
increase is due to $209,462 of new lender fees, $100,192 of new LionPro fees,
$59,319 of new ad banner fees and a reduction of broadcast fax fees totaling
$10,429.
We previously set as a goal the achievement of revenues in any one quarter to be
at least twice the revenues in the same quarter of the preceding year. Although
we achieved this goal during the present quarter, due to a shortage of funding
during the first quarter of 2000 combined with a constricting market and rising
interest rates in the mortgage industry, we expect the rate of increase in
overall revenues during the second quarter of 2000 to slow below this targeted
rate of increase. We received additional funds (see "Liquidity and Capital
Resources" below) during the first part of the second quarter of 2000, and
intend to implement plans to direct the rate of increase in revenues back to our
goal.
DIRECT COSTS
Direct costs are comprised primarily of web site development and salaries
related to the daily updates to rates, fees, and other loan program information
in the mortgage lender database. Direct costs increased to $208,187 from $92,705
for the three months ended March 31, 2000 and 1999, respectively. This
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represents an increase of $115,482 or 125%. Direct costs as a percentage of
revenues were 13.5% and 13% for the three months ended March 31, 2000 and 1999,
respectively. The increase is primarily due to the addition of web masters to
accommodate the increased business in web site development and to the addition
of database personnel to handle the increased volume of rate, fee, and other
program information that is updated on a daily basis.
SELLING AND MARKETING
Marketing and selling expenses are comprised of marketing and advertising costs,
trade show costs, sales salaries and related support costs. Marketing and
selling expenses increased to $524,150 from $349,165 for the three months ended
March 31, 2000 and 1999, respectively. This represents an increase of $174,985
or 50%. These expenses as a percentage of revenues were 34% and 49% for the
three months ended March 31, 2000 and 1999, respectively. The increase in costs
was due primarily to increased use of resources for advertising and marketing
programs and an increase in the tele-marketing sales effort.
GENERAL AND ADMINISTRATIVE
General and administrative expenses are comprised of management and
administrative salaries and related costs, outside consulting services,
telecommunications expenses, occupancy costs, and other administrative related
expenses. General and administrative expenses increased to $661,449 from
$483,461 for the three months ended March 31, 2000 and 1999, respectively. This
represents an increase of $177,988 or 37%. General and administrative expenses
as a percentage of revenues improved to 43% from 68% for the three months ended
March 31, 2000 and 1999, respectively. The increase in costs was due primarily
to (1) increases in management, finance and administrative salaries, (2) an
increase in bad debt expense due to the constricting mortgage industry, and (3)
increased occupancy costs.
COMPENSATION FROM STOCK OPTIONS ISSUED UNDER FAIR MARKET VALUE
During the first quarter of 2000, certain long-time unrelated party employees
exercised stock options in consideration for nonrecourse promissory notes. Under
APB Opinion No. 25, the issuance of stock options under such notes is in essence
a new granting of options. By issuing nonrecourse notes, we extended the
original terms of the fixed award, creating a new measurement date. As such,
additional compensation cost is recognized to the extent that the intrinsic
value of the new award exceeds the original intrinsic value of the original
award. For the three months ended March 31, 2000, we recorded compensation
expense of $181,260 for the difference between the original intrinsic value and
the intrinsic value of the new award.
RESEARCH AND DEVELOPMENT
Research and development expenses are comprised primarily of engineering
salaries and related costs. Research and development expenses increased to
$222,003 from $64,172 for the three months ended March 31, 2000 and 1999,
respectively. This represents an increase of $157,831 or 246%. The increase is
primarily due to our increased efforts to develop the business-to-business (B2B)
strategy through our LoanCat project for supporting online wholesale origination
and fulfillment services. We expect to spend more time and resources on our B2B
strategy in 2000.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization expenses increased to $111,788 from $27,344 for
the three months ended March 31, 2000 and 1999, respectively. This represents an
increase of $84,444 or 309%. Depreciation and amortization expenses were 7% and
4% of revenues for the three months ended March 31, 2000 and 1999, respectively.
The increase of $84,444 was due primarily to the (1) purchase of
telecommunications
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equipment and computer hardware and (2) capitalization of internally
developed software needed to expand and improve our telecommunications and
computer systems infrastructure. We expect these capital expenditure
requirements to continue to grow in the future in order to provide our value
added products and services in both a timely and efficient manner. In
addition, goodwill totaling $566,801 related to the IMark acquisition of
assets recorded on May 17, 1999, contributed approximately $28,340 of
amortization expense for the three months ended March 31, 2000.
INTEREST EXPENSE
Interest expense totaling $63,242 for the three months ended March 31, 2000 is
comprised primarily of amortization of loan fees and interest related to the
Lioninc.com line of credit. Interest expense totaling $46,345 for the three
months ended March 31, 1999 is comprised primarily of interest on convertible
debentures.
INTEREST INCOME
Interest income increased to $16,142 from $9,231 for the three months ended
March 31, 2000 and 1999, respectively. The increase is primarily due to interest
earned on nonrecourse promissory notes related to the exercise of stock options.
LIQUIDITY AND CAPITAL RESOURCES
During fourth quarter 1999, the rate at which outstanding warrants were
converted deteriorated. Only $270,906 out of $840,460 of warrants that were
expiring during the fourth quarter were exercised, for a conversion rate of 32%.
It became apparent that the number of warrants exercised during fourth quarter
1999 and first quarter 2000 would not be adequate to maintain our current level
of spending.
As a result, we implemented a plan to generate profitability and positive cash
flow from operations while maintaining our position as a market leader and
growing our revenue base through new products and key strategic alliances. The
intent was for profitability and positive cash flow from operations to occur by
the end of the first quarter or the beginning of the second quarter. However, as
mentioned in the discussion of "REVENUES" above, due to a shortage of funding
during the first quarter of 2000 combined with a constricting market and rising
interest rates in the mortgage industry, we expect the rate of increase in
overall revenues during the second quarter of 2000 to slow. While we have made
good progress during the first quarter of 2000, management believes that
profitability and positive cash flow from operations will likely not be achieved
before third quarter of 2000.
We had $452,266 in cash and cash equivalents at March 31, 2000. On May 1, 2000,
we received $807,000 (net of $93,000 of issue costs) related to the issuance of
1.5 million shares of Series A Preferred Stock (see "Note 3. Issuance of Series
A Preferred Stock" in the Notes to Consolidated Financial Statements on page 6
of this filing). The remaining unissued shares of the Series A Preferred Stock
totaling 3,282,608 shares may be issued based on a schedule covering 180 days
beginning April 28, 2000. The proceeds from the sale of the Series A Preferred
Stock will be used to payoff certain of our obligations, enhance core products,
and support our future initiatives. Management intends to continue to focus on
its goal of profitability and positive cash flow from operations.
Management believes these plans provide for continuance of operations through
January 1, 2001. However, there can be no assurance that we will be able to
obtain sufficient additional financing when needed or be successful in our
future operations.
During the three months ended March 31, 2000, we used net cash of $158,487 in
our operating activities, compared to the use of $160,862 for operations in the
same quarter in the prior year. The net use of cash
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in operating activities was primarily attributable to (1) research and
development in internal software for automated underwriting and wholesale
origination and fulfillment services, (2) a focus on delivering our core
business, and (3) occupancy and related costs for future growth.
During the three months ended March 31, 2000, we used net cash of $49,027 for
our investing activities compared to $103,841 in the same quarter in the prior
year. The use of cash for investing activities was primarily for capitalized
software development costs related to the LoanCat project (developing solutions
for online wholesale origination and fulfillment services for lenders) in the
current quarter just ended and for the acquisition of equipment and capitalized
software development costs related to automated underwriting for the same
quarter in the prior year.
During the three months ended March 31, 2000, we used cash proceeds from
financing activities primarily from the exercise of warrants. Warrant exercises
during the quarter totaled $472,232. This enabled us to pay down our line of
credit by $209,531 while at the same time reducing other current obligations
throughout the quarter. In the same quarter of the prior year, net cash proceeds
from financing activities totaling $248,960 were primarily from the exercise of
warrants.
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
During the three months ended March 31, 2000, we sold an aggregate of 980,964
shares of common stock to 13 of our existing shareholders at purchase prices
ranging from $.25 to $.50 per share in connection with the exercise of
outstanding warrants, for an aggregate purchase price of $472,232. The investors
were accredited or sophisticated purchasers. We issued the shares in reliance
upon the exemption from registration under Section 4(2) of the Securities Act.
The recipients of securities represented their intentions to acquire the
securities for investment only, and not with a view to sell, or for sale in
connection with any resale or distribution. Appropriate legends were affixed to
the share certificates issued in the transactions. The offering was made without
the use of any general solicitation or advertising. All recipients had access to
all material information concerning the Company.
During the three months ended March 31, 2000, we sold an aggregate of 544,167
shares of common stock to 6 persons at purchase prices ranging from $.01 to
$1.00 per share in connection with the exercise of outstanding options. Cash
consideration was received from 3 persons totaling $20,808 for 94,167 shares at
exercise prices ranging from $.01 to $.65 per share. Nonrecourse promissory
notes were received from 3 persons in the total amount of $309,375 for 450,000
shares at exercise prices ranging from $.25 to $1.00 per share. The promissory
notes accrue interest at 10% per annum with all three notes maturing on July 1,
2001. The issuances of common stock upon the exercise of the stock options were
deemed to be exempt from registration under the Securities Act in reliance on
Rule 701, and were issued pursuant to a written compensation benefit plan in
consummation of offers made prior to our becoming subject to the reporting
requirements of the Exchange Act.
On March 1, 2000, we cancelled the issuance of 187,500 shares of common stock
due to nonpayment by one person on a nonrecourse promissory note coming due on
the same date totaling $156,250.
On March 14, 2000, we granted a warrant for consideration of $2,000 for legal
and financial advisory services. The warrant was granted to 1 person for a total
of 200,000 common shares at an exercise price of $.78 per share and an
expiration date of March 14, 2003. It contains a net issuance exercise
provision, providing that, if the fair market value of our common stock is
greater than the exercise price, in lieu of exercising the warrant for cash, the
holder may elect to receive shares equal to the value of the warrant. The
investor was an accredited or sophisticated purchaser. We issued the shares in
reliance upon the
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exemption from registration under Section 4(2) of the Securities Act. The
recipient of securities represented its intentions to acquire the securities
for investment only, and not with a view to sell, or for sale in connection
with any resale or distribution. The offering was made without the use of any
general solicitation or advertising. The recipient had access to all material
information concerning the Company.
Pursuant to the Company's 1998 Stock Option Plan, we granted stock options to
100 employees at various dates from January to March 2000. These stock options
were comprised of 1,021,875 shares of common stock, expire over 2 to 5 years
from the date of grant, vest in quarterly increments over a 4 year period (with
the exception of options comprised of 140,000 shares that are 100% vested at the
date of grant) and have exercise prices, based on the market price at the date
of grant, ranging from $.62 to $.94 per share. The granting of stock options did
not require registration under the Securities Act, or an exemption therefrom,
since the grants did not involve a "sale" as the term is used in Section 2(3) of
the Securities Act.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits to Part II:
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the quarter ended March 31,
2000.
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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.
PLENUM COMMUNICATIONS, INC.
(Registrant)
Date: May 15, 2000 By: /s/ Allen Ringer
--- ----------------
Allen Ringer
President
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EXHIBIT INDEX
27.1 Financial Data Schedule March 31, 2000.
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATIONS FOUND ON
THE FORM 10-QSB FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2000 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 452,266
<SECURITIES> 0
<RECEIVABLES> 503,177
<ALLOWANCES> 89,977
<INVENTORY> 0
<CURRENT-ASSETS> 1,264,197
<PP&E> 1,522,439
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0
0
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