<PAGE> 1
FORM 10-Q
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 0-26668
HITSGALORE.COM, INC.
- ------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
FLORIDA 65-0036344
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10134 6TH Street, Suite J, Rancho Cucamonga, CA 91730
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(Address of principal executive offices) (ZIP Code)
Registrant's telephone number, including area code (909) 481-8821
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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. X Yes _ No
Number of shares outstanding of the issuer's Common Stock, par value .001 per
share, as of March 31, 1999 - 47,370,314 shares.
<PAGE> 2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
HITSGALORE.COM, INC.
BALANCE SHEETS
<TABLE>
MARCH 31, DECEMBER 31,
1999 1998
--------- ------
(UNAUDITED)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 581,234 $ 1,013
Trade notes and accounts receivable, less
allowance for returns of $62,495 266,687 --
Other current assets 2,355 971
--------- ------
Total current assets 850,276 1,984
Property and equipment, net 59,499 29,750
--------- ------
Total assets $ 909,775 $ 31,734
========= ======
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 28,621 $ --
Borrowings from affiliated company 22,699 22,699
Accrued expenses and other current liabilities 7,500 7,776
Income taxes payable 78,782 252
Merger liabilities assumed 1,715,994 --
--------- ------
Total current liabilities 1,853,596 30,727
--------- ------
Commitments and contingencies
Stockholders' equity (deficit):
Class A convertible preferred stock, stated
value and liquidation preference - $1.00 per
share; authorized 5,000,000 shares, issued and
outstanding 500,000 shares 55,000 --
Class B convertible preferred stock, stated
value and liquidation preference - $1.00 per
share; authorized 10,000,000 shares, issued and
outstanding 100,000 shares 54,764 --
Common stock, $.001 par value; authorized
50,000,000 shares, issued and outstanding
47,370,314 shares 47,370 --
Additional paid in capital 525,578 --
Retained earnings (accumulated deficit) (1,626,533) 1,007
--------- ------
Total stockholders' equity (deficit) (943,821) 1,007
--------- ------
Total liabilities and stockholders' equity
(deficit) $ 909,775 $ 31,734
========= ======
</TABLE>
See Notes to Financial Statements
<PAGE> 3
HITSGALORE.COM, INC.
UNAUDITED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1999
<TABLE>
<S> <C>
Gross revenues $ 463,084
Returns and refunds (8,910)
Allowance for returns and refunds (62,495)
-------
Net revenues 391,679
-------
Costs and expenses:
Selling, general and administrative expenses 180,678
Depreciation and amortization 4,343
-------
Total costs and expenses 185,021
-------
Income before income taxes 206,658
Provision for income taxes 78,530
-------
Net income $ 128,128
=======
Basic earnings per share $ 0.02
=======
Diluted earnings per share $ 0.01
=======
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE> 4
HITSGALORE.COM, INC.
UNAUDITED STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1999
<TABLE>
<S> <C>
Net cash provided by operating activities $ 92,834
-------
Cash flows from investing activities:
Reduction of merger liabilities assumed 151,452
Expenditures for furniture and equipment 34,093
-------
Net cash used in investing activities 185,545
-------
Cash flows from financing activities:
Proceeds from issuance of common stock
and upon exercise of options and warrants 672,932
-------
Net cash provided by financing activities 672,932
-------
Net increase (decrease) in cash 580,221
Cash and cash equivalents at beginning of the
period 1,013
-------
Cash and cash equivalents at end of the period $ 581,234
=======
</TABLE>
Supplemental Disclosure of Cash Flow Information and Non-cash Investing and
Financing Activities:
<TABLE>
<S> <C>
Issuance of common stock upon conversion of notes
payable $ 5,000
Merger liabilities assumed 1,867,446
Capital stock outstanding on date of Merger 116,557
Cash paid during the period for:
Interest --
Income taxes --
</TABLE>
See Notes to Financial Statements
<PAGE> 5
HITSGALORE.COM, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
MARCH 31, 1999
THE REORGANIZATION AND MERGER
On March 19, 1999, the Company (formerly Systems Communications, Inc.) and
Hitsgalore.com, a Nevada corporation ("Old Hitsgalore.com"), completed a
reorganization and merger (the "Reorganization and Merger Agreement",
sometimes referred to herein as the "Reorganization" or "Merger"). Pursuant to
the Reorganization and Merger Agreement, (a) the Company transferred its then
existing business, properties and assets to its wholly-owned subsidiary,
International Healthcare Solutions, Inc. ("IHSI"), (b) caused IHSI to assume
substantially all of the obligations, debts and liabilities of the Company
and, then, (c) Old Hitsgalore.com was merged into the Company and the Company
changed its name to Hitsgalore.com, Inc. For accounting purposes, the merger
of Old Hitsgalore.com into the Company was treated as a recapitalization, with
Old Hitsgalore.com as the acquirer. As a result of the Reorganization and
Merger Agreement, the historical financial statements and operations of Old
Histgalore.com prior to March 19, 1999 became those of the Company. Old
Hitsgalore was incorporated on July 21, 1998 and was in the development stage
until the later part of 1998.
As part of the Reorganization, the Company declared a share consolidation (a
reverse split) of its then issued and outstanding common stock, options,
warrants and other rights to purchase its common stock. The reverse split
reduced each seven shares of common stock outstanding to one share. The
reverse split also applied to all outstanding options, warrants, convertible
securities and other rights to acquire the Company's common stock. The effect
of the reverse split was such that the Company would have approximately
8,000,000 shares of common stock issued and outstanding, assuming exercise of
all such options, warrants and other rights, on the effective date of the
Merger.
In connection with the Merger and Reorganization Agreement, the stockholders
of Old Hitsgalore.com received 37,675,000 shares of common stock in conversion
of all of the issued and outstanding shares of common stock (15,000 shares) of
Old Hitsgalore.com. An additional 2,000,000 shares common stock were issuable
as compensation to consultants and professionals rendering services in
connection with the Merger.
In consideration for the transfer of the Company's previous business,
properties and assets to IHSI, the Company received twenty million shares of
IHSI, constituting all of the outstanding common stock of IHSI. The Company
also declared a dividend in kind, payable in all of the shares of IHSI common
stock, to the Company's stockholders of record on April 6, 1999. In
furtherance of the dividend, the ISHI common stock was transferred into a
constructive trust for the benefit of the Company's stockholders. The IHSI
common stock is to be distributed to the Company's stockholders entitled to
receive the dividend when a registration statement covering the distribution
under the Securities Act of 1933 becomes effective.
<PAGE> 6
In connection with the transfer of the Company's previous business, properties
and assets to IHSI, IHSI assumed all the obligations, debts and liabilities of
the Company that existed at that time. Accordingly, IHSI became jointly and
severally liable with the Company for such obligations, debts and liabilities.
Until all of such obligations, debts and liabilities are satisfied or the
Company is released therefrom, the Company has a security interest in the
assets transferred to IHSI. The liabilities assumed in connection with the
transfer of the assets to IHSI totaled approximately $1.9 million and the
assets transferred to IHSI totaled approximately $500,000, which consisted
primarily of intangibles. The proceeds from the exercise of common stock
options, warrants and other rights to purchase the Company's common stock
outstanding are to be used to pay such obligations, debts and liabilities,
subject to certain limitations. As of the date hereof, the liabilities assumed
in the merger have been reduced to approximately $687,000, which consists
primarily of amounts accrued for unsettled contingencies.
SIGNIFICANT ACCOUNTING POLICIES
The unaudited balance sheet as of March 31, 1999 and the unaudited statements
of operations and cash flows for the three months ended March 31,1999 have
been prepared in accordance with generally accepted accounting principles for
interim financial information. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments, consisting of normal and recurring accruals considered necessary
for a fair presentation, have been included. Results of operations for the
three months ended March 31, 1999 are not necessarily indicative of the
results for the full fiscal year.
Certain amounts in the 1998 financial statements have been reclassified to
conform to the 1999 presentation.
Earnings per Share
The weighted average number of common shares outstanding during the three
months ended March 31, 1999 was approximately 8,433,689 shares. The weighted
average number of common shares outstanding during the period was increased by
1,457,259 shares for purposes of the computation of diluted earnings per share
to include incremental shares from the exercise of outstanding options and
warrants using the treasury stock method and from conversion of $170,000 of
notes and debentures assumed in connection with the Merger.
STOCKHOLDERS' EQUITY
On the effective date of the Merger, the Company had approximately 7,301,262
shares of its common stock issued and outstanding and, in connection with the
Merger, it issued a total of approximately 39,675,000 shares of its common
stock to the former stockholders of Old Hitsgalore.com and for merger costs
and expenses. During the period from the effective date of the merger to March
31, 1999, the Company received net proceeds of approximately $672,933 from the
issuance of approximately 896,795 shares of its common stock upon exercise of
outstanding warrants and options. The Company also converted notes outstanding
in the amount of $5,000 into 5,000 shares of its common stock.
<PAGE> 7
As a result of the Merger, IHSI assumed liabilities of approximately
$1,867,445. The Company recorded an equal amount as "merger liabilities
assumed" in its balance sheet with a corresponding charge to retained earnings
(accumulated deficit). Merger liabilities assumed were reduced by
approximately $151,452 during the period from the effective date of the Merger
to March 31, 1999. This amount has been reflected as an increase in retained
earnings (decrease in accumulated deficit) and as a reduction in additional
paid in capital as of March 31, 1999.
In connection with the issuance of the 39,675,000 shares of common stock to
the former shareholders of Old Hitsgalore.com and as consideration for merger
costs and expenses, the Company recorded a charge to retained earnings
(accumulated deficit) of $39,675, representing the par value ($.001 per share)
of the shares issued.
The components of the balance in accumulated deficit as shown in the
accompanying balance sheet as of March 31, 1999 are as follows:
<TABLE>
<S> <C>
Accumulated earnings $ 129,135
Merger liabilities assumed (1,715,993)
Par value of shares issued in the Merger (39,675)
---------
$(1,626,533)
---------
</TABLE>
UNAUDITED PRO FORMA INFORMATION
The results of operations of the Company prior to the Merger are those of Old
Hitsgalore.com. Pro forma operating results for the three months ended March
31, 1999 are the same as those set forth in the accompanying statement of
operations, except for per share data. The Company's pro forma basic and
diluted earnings per share were less than $0.01 per share for the three months
ended March 31, 1999.
COMMITMENTS AND CONTINGENCIES
On May 13, 1999 and May 16, 1999, two class action suits were filed against
the Company, Mr. Steve Bradford and Mr. Dorian Reed (Case nos.99-05060R and
99-05152R, respectively ) in the United States District Court, Central
District of California, involving the purchase of the Company's securities
during the period from April 16, 1999 to May 11, 1999 and February 17, 1999 to
May 12, 1999, respectively. These suits are based primarily on an alleged
omission of disclosure in the Company's report on Form 8-K filed with the
Securities and Exchange Commission regarding Mr. Reed and the action brought
against Mr. Reed by the Federal Trade Commission. It is not possible to
predict the outcome of these cases or the likelihood or amount of any losses,
if any, in the event of an adverse outcome in either of these cases. No
provision has been made in the accompanying financial statements related to
these matters.
<PAGE> 7
The Company is also subject to various other actions described as follows:
On May 21, 1997, Mr. Jeff Good, as Plaintiff, filed an action in the United
States District Court, Southern District of Iowa, Davenport Division (Case No.
3-97-CV-80085) against the Company, as Defendant, for amounts Mr. Good alleges
are due under an alleged employment agreement between Mr. Good and one of the
Company's subsidiaries (which subsidiary was transferred to IHSI and is no
longer conducting business). This action seeks compensation and benefits under
the employment agreement in excess of $200,000. The Company believes this
action to be without merit and intends to vigorously defend it. The outcome of
this action, favorable or not, is not expected to have any material adverse
impact on the Company's financial condition or future results of operations.
On April 15, 1997, Mr. Ken Lame, as Plaintiff, filed an action in the United
States District Court, District Court of Utah, Central Division (Case No.
2:97CV0292W) against the Company and NSC, as Defendants. This action arises
from a consulting agreement between Mr. Lame and NSC. The action seeks
approximately $250,000, plus interest and attorney's fees, for payments Mr.
Lame alleges are due him under a consulting agreement. The accompanying
financial statements include a loss reserve of approximately $118,500 (which
is included in "merger liabilities assumed') related to this action.
Resolution of this matter adverse to the Company could result in an additional
loss accrual but the Company does not anticipate that it will incur a
liability materially in excess of amounts recorded. Mr. Lame was a petitioner
in the Chapter 7 involuntary bankruptcy proceeding filed against the Company
and had a valid claim against the Company in the bankruptcy in the amount of
approximately $5,000. On April 20, 1999, the U.S. Bankruptcy Court issued an
order dismissing the Petition.
The Company is subject to a consent order, executed in December 1996, between
the Company and the State of Michigan. The consent order requires the Company
to use its best efforts to satisfy the prerequisites of the Security and
Exchange Commission and the Michigan Securities Bureau for registering common
stock sold to Michigan purchasers for resale by them in the public market.
This action is the result of the sale by the Company, prior to the Merger, of
its securities in the State of Michigan without an exemption from registration
under the Michigan Uniform Securities Act. In the event the Company is unable
to effect a registration statement, or such purchasers are unable to resell
their shares pursuant to such registration statement, at a higher price than
their cost, then the Company is required to use its best efforts to satisfy
the prerequisites of the Securities and Exchange Commission and the State of
Michigan for making a rescission offer to all such purchasers. Pursuant to the
consent order, the Company ceased the unregistered sale of securities in
Michigan. As of March 31, 1999, the Company has accrued approximately
$188,105 (which is included in "merger liabilities assumed") for the interest
cost on the maximum amount of the rescission offer, if an offer were to be
made. The number of shares the Company believes is subject to a rescission
offer in the State of Michigan, if such an offer were to be made, totals
approximately 31,000 shares; and, the weighted average purchase price of such
shares is approximately $22.75 per share. The Company believes that certain
holders of the Company's securities residing in the State of Michigan have
sold shares of the Company's common stock that are subject to the consent
order. To the extent that residents of the State of Michigan have sold shares
subject to the consent order, the holders of such shares, to the Company's
knowledge and belief, are not entitled to relief under the consent order
<PAGE> 8
inasmuch as the consent order provides for a rescission offer and not for
damages arising out of the sale of such shares. Accordingly, the Company
believes that its obligations under the consent order have been reduced. The
Company, however, is not able to determine the effect of the sale of such
shares, if any, on the Company's rescission obligation under the consent
order.
The Company is subject to an action by the former shareholders of an acquired
company ("CCI") that was abandoned in 1996. The action seeks to set aside the
Company's compliance with the terms of an arbitration award entered on
February 3, 1998. Included in "merger liabilities assumed" is approximately
$300,000 which has been set aside in the event of an unfavorable outcome. The
Company believes it has meritorious defenses and that it will prevail in this
action, in which case, no additional loss provisions will be required.
The Company is also involved in certain other legal and administrative actions
incurred in the ordinary course of business, none of which are expected to
have a material impact on the Company's future results of operations.
SUBSEQUENT EVENTS
On April 15, 1999, the Company agreed to issue two million shares of its
common stock to The Life Foundation Trust ("LFT") for $10.0 million. LFT has
collateralized its obligation to pay for the shares by assigning a collection
of postage stamps. A third party holds the collection in safekeeping. LFT has
an unconditional and irrevocable obligation to redeem the collateral by
payment of the $10.0 million price for the shares issued, in cash, at the end
of twelve months. The Company issued the shares to LFT in a private
transaction.
On May 15, 1999, the Company entered into a non-binding letter of intent to
issue LFT an additional five million shares of its common stock at a price of
$100.0 million. The issuance of the shares is subject to an increase in the
Company's authorized shares and due diligence to the Company's satisfaction on
a $900.0 million Promissory Oil Production Note to be delivered as collateral
for LFT's obligation to pay the purchase price. The Company's security
interest in the note is to be limited to $100.0 million and is to be an
undivided interest with LFT, who has agreed to permit the Company to receive
the first $100.0 million paid under the note. There is no assurance the
Company can obtain stockholder approval for an increase in authorized shares
or that, if the transaction is completed, any payments will be received on the
note (in which case the Company would seek foreclosure on certain oil and gas
leases securing the note).
LFT has reserved Local City Editions (LCEs) for up to 200 local city areas for
a total purchase price of $10.0 million. The agreement provides for, among
other things, that the LCEs will be brought on line over the next twelve
months. LFT's unconditional and irrevocable obligation to pay the $10.0
million for the LCEs is collateralized by the assignment of the stamp
collection described above. Payment for the licenses is subject to the Company
and LFT identifying and bringing LCEs on line. The Company will accrue a LCE
fee receivable at the time each LCE is identified and agreements for the LCEs
are executed. At the end of one year, LFT must redeem the collateral asset for
the amount of any accrued license fees. The Company intends to establish and
maintain each Local City Edition. The Company also intends to recruit
companies in each local city where the Company establishes a LCE on behalf of
LFT to sell banner ads and provide local content to the websites. There is no
assurance the Company can recruit companies in every such local city, or that
the Company can adequately maintain such LCEs itself.
<PAGE> 9
On April 20, 1999, the Company completed the purchase of all rights, title and
interest in the internet-related development assets, equipment and software,
owned or under development, by Solvere, Inc., a closely held Delaware
corporation. The assets acquired included all computer equipment, software and
internet technology, including, but not limited to all of Solvere's e-commerce,
web-based e-mail, multimedia distribution system and shopping cart technology.
The total purchase price consisted of $125,000 in cash and 100,000 newly issued
shares of the Company's common stock valued and recorded at approximately
$770,000.
Pursuant to the asset purchase agreement, the Company is to pay Solvere, Inc.
$4,000 per month for future systems maintenance costs incurred by Solvere,
Inc. and $125,000 for future development of the acquired internet software
technology. The Company and Solvere, Inc. also agreed to co-license certain of
Solvere, Inc.'s proprietary technology in return for the payment to Solvere,
Inc. of 50% of all marketing costs incurred by Solvere, Inc. and approved by
the Company. The Company was also granted an unrestricted right to use the
proprietary technology.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
As a result of the Merger, the historical financial statements and operations
of Old Hitsgalore.com became those of the Company. Old Hitsgalore.com was
incorporated on July 21, 1998, began beta operations in August 1998 and
launched its website in November 1998. Accordingly, no comparisons can be made
between the results of operations for the three months ended March 31, 1999
and 1998, as Old Hitsgalore.com had no operations for the comparable 1998
period.
The following discussion should be read in conjunction with the Financial
Statements and notes thereto, appearing elsewhere herein.
Net revenues-
The Company had gross revenues of $463,084 for the three months ended March
31, 1999. A portion of these revenues were from the sale of "Local City
Editions (LCEs)". The Company ceased offering LCEs in April 1999 as a result
of the sale in a negotiated transaction of LCEs for up to 200 local city areas
to Life Foundation Trust for a total purchase price of $10.0 million. The
remaining revenues were from the sale of the sponsorship rights and from the
Company's bid and rank program.
Returns and allowances-
The Company provides an allowance for returns and refunds based on estimates.
Amounts provided are subject to change. For the three months ended March 31,
1999, the Company provided an allowance of $62,495 or approximately 13.5% of
total revenues. Actual returns and allowances were approximately $8,900 or
approximately 1.9% of total sales.
Selling, general and administrative expenses-
Selling, general and administrative expenses consist primarily of sales
commissions, salaries and wages and the cost of communications services. Such
expenses totaled approximately 39% of gross revenues for the 1999 1st quarter.
<PAGE> 10
DEPRECIATION AND AMORTIZATION
Depreciation and amortization for the three months ended March 31, 1999
totaled approximately $4,343.
INCOME TAXES
For the three months ended March 31, 1999, the provision for income taxes was
approximately 38% of pre-tax income. The principal reason for the difference
between the Federal income tax rate of 34% and the effective tax rate was the
effect of state income taxes.
LIQUIDITY AND CAPITAL RESOURCES
For the three months ended March 31, 1999, the Company generated cash from
operations totaling approximately $92,834 and received cash of approximately
$672,932 from the issuance of 896,795 shares of its common stock and upon
exercise of outstanding options and warrants.
The principal uses of cash were for capital expenditures and reductions in
merger liabilities assumed of approximately $34,093 and $151,452,
respectively.
As of March 31, 1999, the Company does not have any used or unused lines of
credit or any other committed and unused financing facilities. The Company has
entered into various transactions with The Life Foundation Trust ("LFT") for
the sale of its common stock and the purchase by LFT of Local City Editions
("LCEs") for up to 200 local city areas. The transactions with LFT call for
the payment of up to $120.0 million to the Company within the next twelve
months. These payments are or will be secured by the pledge or an assignment
of certain assets to the Company by LFT.
The Company believes that cash flows from operations will be sufficient to
meet its liquidity needs for the next twelve months.
<PAGE> 11
HITSGALORE.COM, INC.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
All material pending legal proceedings to which the Registrant is a party and
proceedings which have been terminated are described in the notes to financial
statements included elsewhere herein and in the Company's Annual Report on
Form 10-K for the year ended December 31, 1998, respectively.
Item 5. Other Items
The Company has requested the permission of the Securities and Exchange
Commission to withdraw its amended Annual Report for the year ended December
31, 1997 and its Annual Report for the year ended December 31, 1998, both of
which were filed on May 26, 1999. On the day following the filing of these
annual reports, the Registrant was notified that the predecessor auditor, who
reported on the financial statements of the Company for the year ended 1996,
would not permit its audit report to be associated with any filing of the
Registrant. The reason given by the predecessor auditor was the voluntary
disclosure of certain matters by the Registrant regarding Mr. Dorian Reed, a
principal stockholder, in its Annual Report for the year ended December 31,
1998. The Company has also requested the permission of the Securities and
Exchange Commission to re-file its amended Annual Report for the year ended
December 31, 1997 and its Annual Report for the year ended December 31, 1998
without any audit report for the 1996 fiscal year.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
2.1 * Reorganization and Merger Agreement, dated February 11, 1999,
between Systems Communications, Inc. and Hitsgalore.com.
10.44.** Letter of Intent, Subscription for Stock dated April 15, 1999,
between Hitsgalore.com, Inc and The Life Foundation Trust.
10.45.** Subscription Agreement and Investment Representations dated
April 15, 1999 between Hitsgalore.com, Inc. and The Life
Foundation Trust.
10.46.** Purchase Agreement dated March 29, 1999 between Hitsgalore.com,
Inc. and Solvere, Inc.
27.*** Financial Data Schedule ( Three Months Ended March 31, 1999).
* Incorporated by reference to the Company's Current Report on Form 8-K
as filed on February 16, 1999.
** Incorporated by reference to the Company's Annual Report on Form 10-K
for the year ended December 31, 1998.
*** Filed herewith.
<PAGE> 12
(b) Reports on Form 8-K:
The following reports were filed on Form 8-K for the three months ended March
31, 1999, and prior to the filing date hereof:
The Company filed a Form 8-K on February 16, 1999. The event reported was a
Reorganization and Merger Agreement entered into between the Company and
Hitsgalore.com on February 11, 1999. The Reorganization and Merger Agreement
was completed on March 19, 1999.
The Company filed a Form 8-K on March 10, 1999. The event reported was the
dismissal of the involuntary proceeding filed against the Company under
Chapter 7 of the U.S. Bankruptcy Code. The U.S. Bankruptcy Court issued the
order dismissing the bankruptcy petition on April 20, 1999.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
HITSGALORE.COM, INC. Date: June 4, 1999.
By /s/ Steve Bradford
----------------------------
President, Principal Accounting
Officer and Director
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF HITSGALORE.COM, INC. FOR THE THREE MONTHS
ENDED MARCH 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 581,234
<SECURITIES> 0
<RECEIVABLES> 329,182
<ALLOWANCES> 62,495
<INVENTORY> 0
<CURRENT-ASSETS> 850,276
<PP&E> 65,725
<DEPRECIATION> (6,226)
<TOTAL-ASSETS> 909,775
<CURRENT-LIABILITIES> 1,853,596
<BONDS> 0
0
109,764
<COMMON> 47,370
<OTHER-SE> (1,100,955)
<TOTAL-LIABILITY-AND-EQUITY> 909,775
<SALES> 463,084
<TOTAL-REVENUES> 391,679
<CGS> 0
<TOTAL-COSTS> 185,021
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 206,658
<INCOME-TAX> 78,530
<INCOME-CONTINUING> 128,128
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 128,128
<EPS-BASIC> .02
<EPS-DILUTED> .01
</TABLE>
