UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-QSB
(Mark One)
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the period ended March 31, 2005
| o | TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _______ to _______.
Commission File Number 0-09358
LIMELIGHT MEDIA GROUP, INC. |
| (Exact name of small business issuer as specified in its charter) |
Nevada | | 88-0441338 |
(State or other jurisdictionof (incorporation or organization) | | (I.R.S. EmployerIdentification No.) |
8000 Centerview Parkway, Suite 115
Memphis, TN
_______________________
(Address of principal executive offices)
(901) 757-0195
(Issuer's telephone number)
Check whether the issuer (1) 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. Yesx Noo
As of May 20, 2005,132,525,161shares of the issuer's common stock, $.001 par value per share, were outstanding.
Transitional Small Business Disclosure Format (check one): Yeso Nox
When used in this Report, the words "believes", "anticipates", "expects" and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected.
Our business and results of operations are affected by a wide variety of factors that could materially and adversely affect our company and our actual results, including, but not limited to: (1) the availability of additional funds to enable us to successfully pursue our business plan; (2) the uncertainties related to the effectiveness of our technologies and the development of our products and services; (3) our ability to maintain, attract and integrate management personnel; (4) our ability to complete the development of our proposed services in a timely manner; (5) our ability to effectively market and sell our services to current and new customers; (6) our ability to negotiate and maintain suitable strategic licenses and corporate relationships; (7) the intensity of competition; and (8) general economic conditions. As a result of these and other factors, we may experience material fluctuations in future operating results on a quarterly or annual basis, which could materially and adversely affect our business, financial condition, operating results and stock price.
These forward-looking statements speak only as of the date hereof. We undertake no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
LIMELIGHT MEDIA GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED BALANCE SHEET
MARCH 31, 2005
(UNAUDITED)
| ASSETS | |
| | | | |
| Current assets | | | |
| Cash | | $ | 48,586 | |
| Accounts receivable | | | 346 | |
| Total current assets | | | 48,932 | |
| | | | | |
| Fixed assets, net | | | 172,478 | |
| | | | | |
| Other assets | | | 21,020 | |
| | | | | |
| Total assets | | $ | 242,430 | |
| | | | | |
| LIABILITIES AND STOCKHOLDERS' DEFICIT |
| | | | | |
| Current liabilities | | | | |
| Accounts payable and accrued expenses | | $ | 262,449 | |
| Due to related parties | | | 490,638 | |
| Convertible loan payable | | | 10,000 | |
| Loans payable | | | 25,000 | |
| Other liabilities | | | 217,087 | |
| Total current liabilities | | | 1,005,174 | |
| | | | | |
| Total liabilities | | | 1,005,174 | |
| | | | | |
| Commitments and contingencies | | | -- | |
| | | | | |
| Stockholders' deficit | | | | |
| Common stock - $.001 par value, 250,000,000 shares authorized, 131,759,160 shares issued and 119,989,228 shares outstanding | | | 119,988 | |
| Additional paid-in capital | | | 8,669,570 | |
| Cash equivalent credit paid in common stock | | | (125,000 | ) |
| Accumulated deficit | | | (9,427,302 | ) |
| Total stockholders' deficit | | | (762,744 | ) |
| | | | | |
| Total liabilities and stockholders' deficit | | $ | 242,430 | |
See Accompanying Notes to Financial Statements
LIMELIGHT MEDIA GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
| | | For the Three Months Ended March 31, 2005 | | For the Three Months Ended March 31, 2004 | | For the Period From April 19, 2001 (Inception) through March 31, 2005 | |
| | | | | | | | |
| Revenue | | $ | -- | | $ | -- | | $ | 140,466 | |
| | | | | | | | | | | |
| Cost of revenue | | | -- | | | -- | | | 80,085 | |
| | | | | | | | | | | |
| Gross profit | | | -- | | | -- | | | 60,381 | |
| | | | | | | | | | | |
| General and administrative expenses | | | | | | | | | | |
| Bad debt | | | -- | | | -- | | | 16,863 | |
| Consulting fees | | | 1,364 | | | 1,346,116 | | | 5,267,918 | |
| Depreciation | | | 16,137 | | | 7,301 | | | 122,651 | |
| Loss related to rescission of UniGuest acquisition | | | -- | | | -- | | | 24,669 | |
| Bad debt related to note receivable | | | -- | | | -- | | | 169,030 | |
| Bad debt related to due from UniGuest | | | -- | | | -- | | | 25,000 | |
| Other general and administrative expenses | | | 96,659 | | | 516,997 | | | 2,660,732 | |
| | | | | | | | | | | |
| Total general and administrative expenses | | | 114,160 | | | 1,870,414 | | | 8,286,863 | |
| | | | | | | | | | | |
| Loss from operations | | | (114,160 | ) | | (1,870,414 | ) | | (8,226,482 | ) |
| | | | | | | | | | | |
| Other income (expense) | | | | | | | | | | |
| Interest income | | | -- | | | -- | | | 4,960 | |
| Gain on sale of fixed asset | | | -- | | | -- | | | 1,123 | |
| Release of escrow shares | | | (31,213 | ) | | -- | | | (31,213 | ) |
| Gain (loss) related to settlements and judgments | | | 5,450 | | | -- | | | (164,938 | ) |
| Other income | | | 2,647 | | | -- | | | 2,647 | |
| Interest expense | | | (516,250 | ) | | (370,731 | ) | | (1,013,399 | ) |
| | | | | | | | | | | |
| Loss before provision for income taxes | | | (653,526 | ) | | (2,241,145 | ) | | (9,427,302 | ) |
| | | | | | | | | | | |
| Income tax provisions | | | -- | | | -- | | | -- | |
| | | | | | | | | | | |
| Net loss | | $ | (653,526 | ) | $ | (2,241,145 | ) | $ | (9,427,302 | ) |
| | | | | | | | | | | |
| Basic and diluted loss per common share | | $ | (0.01 | ) | $ | (0.05 | ) | $ | (0.28 | ) |
| | | | | | | | | | | |
| Basic and diluted weighted average common shares outstanding | | | 110,398,072 | | | 47,731,685 | | | 33,834,520 | |
See Accompanying Notes to Financial Statements
LIMELIGHT MEDIA GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENT OF STOCKHOLDERS' DEFICIT
| | | Common stock | | | | | | | | | | | |
| | | | | Amount | | Additional Paid-in capital | | Standby Equity Distribution Agreement | | Common Stock | | Accumulated Deficit | | | |
| Balance, December 31, 2004 | | | 89,137,200 | | | 89,136 | | | 6,706,872 | | | (276,192 | ) | | (125,000 | ) | | (8,773,776 | ) | | (2,378,960 | ) |
| | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of common stock for due to related parties and convertible loan payable - related party (including interest of $130,762), weighted average $0.06 per share | | | 18,528,468 | | | 18,989 | | | 1,115,208 | | | -- | | | -- | | | -- | | | 1,134,197 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of common stock in satisfaction of accounts payable (including interest of $312,819), weighted average $0.09 per share | | | 4,444,164 | | | 4,444 | | | 375,196 | | | -- | | | -- | | | -- | | | 379,640 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of common stock in satisfaction of loans payable (including interest of $56,000 and accrued interest of $1,300), weighted average $0.08 per share | | | 1,470,000 | | | 1,470 | | | 110,330 | | | -- | | | -- | | | -- | | | 111,800 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of common stock in satisfaction of convertible debenture (including accrued interest of $18,497), $0.03 per share | | | 3,541,537 | | | 3,542 | | | 89,955 | | | -- | | | -- | | | -- | | | 93,497 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of common stock for return of warrants, $0.07 per share | | | 100,000 | | | 100 | | | 6,450 | | | -- | | | -- | | | -- | | | 6,550 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Release of escrow shares related to termination of Standby Equity Distribution Agreement, $0.04 per share | | | 867,030 | | | 867 | | | 30,346 | | | -- | | | -- | | | -- | | | 31,213 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Reversal of amortization of loan fees and removal of convertible fee debenture related to Standby Equity Distribution Agreement pursuant to termination of the Standby Equity Distribution Agreement | | | -- | | | -- | | | 63,808 | | | 276,192 | | | -- | | | -- | | | 340,000 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of common stock in satisfaction of other liabilities, $0.20 per share | | | 500,000 | | | 500 | | | 99,500 | | | -- | | | -- | | | -- | | | 100,000 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Cashless exercise of warrants granted in satisfaction of loan payable (including interest of $4,845) | | | 990,000 | | | 990 | | | 63,855 | | | -- | | | -- | | | -- | | | 64,845 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of common stock for interest, $0.08 per share | | | 100,000 | | | 100 | | | 7,900 | | | -- | | | -- | | | -- | | | 8,000 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Cancellation of common stock | | | (150,000 | ) | | (150 | ) | | 150 | | | -- | | | -- | | | -- | | | -- | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Net loss | | | -- | | | -- | | | -- | | | -- | | | -- | | | (653,526 | ) | | (653,526 | ) |
| | | | | | | | | | | | | | | | | | | | | | | |
| Balance, March 31, 2005 (UNAUDITED) | | | 119,528,399 | | $ | 119,988 | | $ | 8,669,570 | | $ | -- | | $ | (125,000 | ) | $ | (9,427,302 | ) | $ | (762,744 | ) |
See Accompanying Notes to Financial Statements
LIMELIGHT MEDIA GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| | | For the Three Months Ended March 31, 2005 | | For the Three Months Ended March 31, 2004 | | For the Period From April 19, 2001 (Inception) through March 31, 2005 | |
| Cash flows from operating activities: | | | | | | | |
| Net loss | | $ | (653,526 | ) | $ | (2,241,145 | ) | $ | (9,427,302 | ) |
| Adjustments to reconcile net loss to net cash used by operating activities: | | | | | | | | | | |
| Stock based compensation | | | 37,763 | | | 1,471,631 | | | 4,114,492 | |
| Stock based compensation related to interest | | | 512,426 | | | -- | | | 724,106 | |
| Depreciation | | | 16,137 | | | 7,301 | | | 122,651 | |
| Beneficial conversion feature of loans payable and debenture | | | -- | | | 174,842 | | | 174,842 | |
| Bad debt related to note and related interest receivable | | | -- | | | -- | | | 169,030 | |
| Bad debt related to due from UniGuest | | | -- | | | -- | | | 25,000 | |
| Loss related rescission of UniGuest acquisition | | | -- | | | -- | | | 24,669 | |
| Loss related to settlement paid in common stock | | | -- | | | -- | | | 60,000 | |
| Amortization of loan fees paid in common stock | | | -- | | | -- | | | 114,220 | |
| Gain on sale of fixed assets | | | -- | | | -- | | | (1,123 | ) |
| Accrual of due to related parties | | | -- | | | -- | | | 779,382 | |
| Changes in operating assets and liabilities: | | | | | | | | | | |
| Change in accounts receivable | | | -- | | | -- | | | (36,048 | ) |
| Change in interest receivable | | | -- | | | -- | | | (4,769 | ) |
| Change in other assets | | | (17,700 | ) | | -- | | | (21,020 | ) |
| Change in accounts payable and accrued expenses | | | 210 | | | 106,443 | | | 370,893 | |
| Change in other liabilities | | | 34,000 | | | 5,333 | | | 398,035 | |
| Net cash used by operating activities | | | (70,690 | ) | | (475,595 | ) | | (2,412,942 | ) |
| | | | | | | | | | | |
| Cash flows from investing activities: | | | | | | | | | | |
| Loan made related to note receivable | | | -- | | | -- | | | (144,261 | ) |
| Sale of fixed assets | | | -- | | | -- | | | 3,950 | |
| Decrease in cash due to rescission of acquisition | | | -- | | | -- | | | (15,432 | ) |
| Purchase of fixed assets | | | (2,344 | ) | | (14,496 | ) | | (301,948 | ) |
| Net cash used by investing activities | | | (2,344 | ) | | (14,496 | ) | | (457,691 | ) |
| | | | | | | | | | | |
| Cash flows from financing activities: | | | | | | | | | | |
| Change in due to related parties | | | 11,347 | | | 22,671 | | | 1,143,494 | |
| Advance from convertible loans payable - related parties | | | -- | | | -- | | | 52,500 | |
| Proceeds from loans payable | | | 110,000 | | | -- | | | 410,000 | |
| Principal payments on loans payable | | | -- | | | (5,000 | ) | | (135,500 | ) |
| Advance from convertible loans payable | | | -- | | | -- | | | 10,000 | |
| Proceeds from convertible debentures | | | -- | | | 250,000 | | | 500,000 | |
| Proceeds from issuance of common stock | | | -- | | | 209,167 | | | 938,725 | |
| Net cash provided by financing activities | | | 121,347 | | | 476,838 | | | 2,919,219 | |
| | | | | | | | | | | |
| Net change in cash | | | 48,313 | | | (13,253 | ) | | 48,586 | |
| | | | | | | | | | | |
| Cash, beginning of period | | | 273 | | | 15,366 | | | -- | |
| | | | | | | | | | | |
| Cash, end of period | | $ | 48,586 | | $ | 2,113 | | $ | 48,586 | |
| | | | | | | | | | | |
| Supplementary cash flow information: | | | | | | | | | | |
| Cash payments for income taxes | | $ | -- | | $ | -- | | $ | -- | |
| Cash payments for interest | | $ | -- | | $ | -- | | $ | -- | |
See Accompanying Notes to Financial Statements
LIMELIGHT MEDIA GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENTS OF CASH FLOWS (CONTINUED)
(UNAUDITED)
| | | For the Three Months Ended March 31, 2005 | | For the Three Months Ended March 31, 2004 | | For the Period From April 19, 2001 (Inception) through March 31, 2005 | |
| Schedule of non-cash operating, investing and financing activities: | | | | | | | |
| Issuance of 2,548,893 shares of common stock in satisfaction of other liabilities | | $ | -- | | $ | 80,948 | | $ | 80,948 | |
| | | | | | | | | | | |
| Issuance of 500,000 shares of common stock in satisfaction satisfaction of other liabilities | | $ | 100,000 | | $ | -- | | $ | 100,000 | |
| | | | | | | | | | | |
| Issuance of 3,541,537 shares of common stock in satisfaction of convertible debenture (including accrued interest of $18,497) | | $ | 93,497 | | $ | -- | | $ | 93,497 | |
| | | | | | | | | | | |
| Issuance of 18,528,468 shares of common stock in satisfaction of due to related parties ($993,435) and convertible loans payable - related party ($10,000) (excluding interest of $130,762) | | $ | 1,003,435 | | $ | -- | | $ | 1,003,435 | |
| | | | | | | | | | | |
| Issuance of 4,444,164 shares of common stock in satisfaction of accounts payable (excluding interest of $312,819) | | $ | 66,821 | | $ | -- | | $ | 66,821 | |
| | | | | | | | | | | |
| Issuance of 1,470,000 shares of common stock in satisfaction of loans payable (excluding interest of $56,000 and including accrued interest of $1,300) | | $ | 55,800 | | $ | -- | | $ | 55,800 | |
| | | | | | | | | | | |
| Reversal of amortization of loan fees and removal of convertible fee debenture distribution agreement pursuant to termination of the Standby Equity Distribution Agreement | | $ | 340,000 | | $ | -- | | $ | 340,000 | |
See Accompanying Notes to Financial Statements
LIMELIGHT MEDIA GROUP, INC.
(FORMERLY SHOWINTEL NETWORKS, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
Limelight Media Group was incorporated on May 17, 1996, in the State of Nevada as Multinet International Corporation. On September 26, 2001, Multinet consummated an agreement to acquire all of the then outstanding capital stock of Limelight Media Group, Inc., formerly Showintel Networks, Inc., a Nevada corporation, in exchange for 18,000,000 shares of Multinet’s common stock. Prior to the acquisition of all of the outstanding capital stock of Limelight, Multinet was a public company with no operations or assets and 2,431,000 shares of common stock issued and outstanding. Limelight was a privately held company with assets being used for the development of video-streaming technology. Limelight became a wholly-owned subsidiary as of the date of closing. The existing officers and directors of Multinet appointed David V. Lott as a director of Multinet before resigning, effective as of the closing of the transaction. On September 1, 2002, Multinet purchased all of the outstanding capital of Uniguest of Tennessee, Inc., a Tennessee corporation, in consideration for 500,000 shares of Multinet’s common stock. Uniguest installed and operated public internet access terminals in hotels throughout the United States. Limelight divested itself of its ownership in Uniguest effective October 6, 2003. On October 3, 2003, Multinet amended its Articles of Incorporation to change its name to Limelight Media Group, Inc.
Limelight is a Tennessee-based, publicly traded company (LMMG.OB) that has developed a digital out-of-home media network. The network is centrally managed and is applicable over the growing digital signage industry in any location where a message needs real time display. The company focuses on two general markets: point of decisions and captive audience. Historically, the company has emphasized a captive audience network in movie theater lobbies. In 2004, the company began developing other markets. The company is currently developing a mall based captive audience network utilizing sponsor driven themed soft zones and point of sale advertising opportunities on DVD rental machines.. During the third quarter the company entered an agreement to provide content management and advertising sales for a digital signage systems in grocery stores.. By diversifying the markets the company may realize revenue from multiple sources.
Limelight has developed a system to distribute digitally advertisements, marketing messages and entertainment video content via broadband connection for viewing in public locations such as movie theater lobbies, on theater screens and in retail locations as convenience stores, grocery stores and malls. . The Content Management System, facilitates digital video content to be transmitted in digital files, replacing the soon-to-be antiquated utilization of photographic slides, VCR tape and DVDs. The previous focus of deployment for Limelight’s technology has been within movie theaters. However, during 2003 Limelight pursued opportunities to expand to the retail industry. Limelight has two types of clients, the “location partner,” and the advertiser who wishes to reach the patrons that visit the location partner’s venues. A location partner can be a theater owner, retail storeowner or whoever is charged with the marketing and management of a physical facility. Revenue is derived from advertising sales, sponsorships, subscription agreements, equipment sales, maintenance and installation fees and content development fees.
Limelight provides a turn-key solution for businesses desiring digital signage systems for information display. Limelight contacts high traffic businesses such a movie theaters, malls, restaurants and retail stores to determine if a digitally managed captive audience networks is desired. Limelight installs all necessary servers and displays for its customers. Depending on the agreement, Limelight may provide the equipment at no cost to the location partner and share in the revenue or the partner may purchase the equipment and pay a monthly fee to Limelight for sales and administration. The system is connected via a telephone line or broadband internet to Limelight’s video and content management servers. Limelight generally provides the programming and markets the network space to potential advertisers. These advertising revenues pay for the cost of installation and administration of the network and programming. The location partner mayreceive a portion of the revenue generated from advertising sales on a negotiated basis depending on their level of involvement in the payment of the system.
LIMELIGHT MEDIA GROUP, INC.
(FORMERLY SHOWINTEL NETWORKS, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
Advertising is presented on single or multiple screens installed by the company at the location. The displays are typically located above the concession stands, register checkout lanes or main corridors, which are considered to be the ideal locations to attract the attention of patrons who are entering and leaving the location.
The interim financial statements present the balance sheet, statements of operations, stockholders' equity and cash flows of Limelight Media Group, Inc.
The interim financial information is unaudited. In the opinion of management, all adjustments necessary to present fairly the financial position as of March 31, 2005 and the results of operations and cash flows presented herein have been included in the financial statements. Interim results are not necessarily indicative of results of operations for the full year.
The accompanying financial statements have been prepared in accordance with Securities and Exchange Commission requirements for interim financial statements. Therefore, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. The financial statements should be read in conjunction with the Form 10-KSB for the year ended December 31, 2004 of the Company.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
NOTE 2 - STOCK-BASED COMPENSATION
The Company applies Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees, and Related Interpretations”, in accounting for stock options issued to employees. Under APB No. 25, employee compensation cost is recognized when estimated fair value of the underlying stock on date of the grant exceeds exercise price of the stock option. For stock options and warrants issued to non-employees, the Company applies SFAS No. 123, “Accounting for Stock-Based Compensation”. SFAS No 123 requires the recognition of compensation cost using a fair value based method whereby compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. The Company uses the Black-Scholes pricing model to calculate the fair value of options and warrants issued to non-employees. Stock issued for compensation to both employees and non-employees is valued using the market price of the stock on the date of the related agreement.
The Company granted no warrants or options to employees for compensation for the three months ended March 31, 2005 and 2004. All stock issued for compensation was recorded at the fair market value of the stock.
LIMELIGHT MEDIA GROUP, INC.
(FORMERLY SHOWINTEL NETWORKS, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 3 - GOING CONCERN
The Company incurred a net loss of approximately $9.4 million for the period from April 19, 2001 (Date of Inception) through March 31, 2005. The Company's current liabilities exceed its current assets by approximately $1.0 million as of March 31, 2005. The Company’s net cash used by operating activities approximated $3.1 million for the period from April 19, 2001 (Date of Inception) through March 31, 2005. These factors create substantial doubt about the Company's ability to continue as a going concern. The Company's management plans to complete the development of the infrastructure necessary to deliver the video-streaming technology in order to fully commence its operations and therewith generate future revenues. The Company will also seek additional sources of capital through the issuance of debt and equity financing, but there can be no assurance that the Company will be successful in accomplishing its objectives.
The ability of the Company to continue as a going concern is dependent on additional sources of capital and the success of the Company's plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
NOTE 4 - RELATED PARTY TRANSACTIONS
Due to related parties - Due to related parties consists of the following as of March 31, 2005:
| Loan payable to the Company’s President and majority stockholder, secured by the Company’s assets bearing interest at 9% per annum, payable in monthly installments of interest only, due on demand | | $ | 385,307 | |
| | | | | |
| Unreimbursed expenses to various employees | | | 1,078 | |
| | | | | |
| Unreimbursed expenses to the Company’s President and majority Stockholder, unsecured, bearing no interest and due on demand | | | 69,391 | |
| | | | | |
| Unreimbursed expenses to various stockholders, unsecured, | | | | |
| bearing no interest and due on demand | | | 10,600 | |
| | | | | |
| Accrued interest on related party loans | | | 24,262 | |
| | | | | |
| | | $ | 490,638 | |
Common stock - During January 2005, the Company issued 17,878,468 shares of the Company’s common stock to the President and various stockholders in satisfaction of due to related parties and a convertible loan payable - related party totaling $969,538 and $10,000, respectively, excluding interest of $93,559.
In February 2004, the Company entered into a Common Stock Purchase Agreement with an entity to sell 175,000 shares of the Company's common stock for $25,000 in cash and an additional 175,000 shares for consulting services totaling $153,500. In addition, if the open market price on the closing bid is below fifty cents for three consecutive days during the thirty days following the effective registration of the Company's common stock, the buyer is entitled to a pro-rata adjustment to the number of shares equal to a 50% discount to the lowest bid price of those three days. As of December 31, 2004, the Company and this stockholder settled for an additional 985,000 shares recorded as a due to related parties totaling $31,520. These shares were issued in January 2005 as discussed above.
During March 2005, the Company issued 650,000 shares of the Company’s common stock to a stockholder in satisfaction of due to related parties totaling $23,897, excluding interest of $37,203.
LIMELIGHT MEDIA GROUP, INC.
(FORMERLY SHOWINTEL NETWORKS, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 5 - CONVERTIBLE LOAN PAYABLE
In August 2003, the Company borrowed $10,000 from an individual which matured during August 2004, unsecured, and bearing interest at 12%. As of March 31, 2005 the balance of $10,000 is in default and recorded as a current liability. The individual is entitled to convert all or a portion of the principal balance into shares of the Company’s common stock at a conversion price of $0.20 per share. Further, the individual has the option of receiving payment of accrued interest in cash or 50,000 shares of the Company’s common stock.
NOTE 6 - LOANS PAYABLE
Pending in the State Court of Cherokee County, Georgia filed September 9, 2002, D&D Management, Inc. is alleging it entered into a loan agreement with the Company during February 2002 for $54,000 which has not been repaid. The Company is defending on the basis that it issued D&D Management, Inc. 89,000 shares of the Company’s common stock in consideration of repayment and for settlement. D&D Management, Inc. is responding that the shares were issued for consulting services. The Company denies services were rendered and is pursuing settlement negotiations. The Company has recognized a liability of $25,000, based on management’s estimate of negotiated terms.
NOTE 7 - STANDBY EQUITY DISTRIBUTION AGREEMENT
During February 2004, the Company entered into a Standby Equity Distribution Agreement (“Distribution Agreement”) with Cornell Capital Partners, LLC (“Cornell”). The Distribution Agreement entitles the Company to draw funds up to $12,000,000 from issuance of its common stock for an amount equal to 97% of the lowest closing bid price on the Over-the-Counter Bulletin Board or other principal market 5 days immediately following the advance notice date. The Distribution Agreement expires in August 2006, subject to certain terms and conditions. Cornell will retain 5% of each advance under the Distribution Agreement. Additionally, the Distribution Agreement required the Company to pay Cornell a commitment fee in the amount of $340,000 to be paid by the issuance of a Convertible Fee Debenture as discussed below. Furthermore, the Company was required to file a registration statement on Form SB-2 with the Securities and Exchange Commission (“SEC”) for the registration of common stock for future issuance related to the Distribution Agreement. The SEC declared the registration statement effective on August 16, 2004.
Subsequent, to the effective date of the registration statement, the Company has requested several funding transactions pursuant to the Distribution Agreement. Cornell has declined funding several of the requests pursuant to the Distribution Agreement. However, 867,030 shares of common stock have been placed in escrow and Cornell has not responded to demands to return the stock.
On November 5, 2004, the Company requested a meeting with Cornell for the purpose of redeeming the shares registered under the Distribution Agreement between Cornell and the Company. On November 12, 2004, the Company presented a formal notice to Cornell under the terms of the Distribution Agreement giving the Company the right to redeem the registered shares. On November 23, 2004, the Company sent a second formal notice under its rights to redeem the shares pursuant to the debenture agreements. Cornell has not responded to the notices. In the second formal notice of November 23, 2004, Cornell was informed that its rights to conversion of the debentures would be denied given that Cornell had received several notices from The Company since November 8, 2004 to redeem the shares.
During January 2005, the Company terminated the Distribution Agreement with Cornell.
LIMELIGHT MEDIA GROUP, INC.
(FORMERLY SHOWINTEL NETWORKS, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
During February 2004, pursuant to the Distribution Agreement, the Company issued a Convertible Fee Debenture (“Debenture”) to Cornell totaling $340,000. The balance is unsecured, bears an interest rate of 5.0%, with principal and interest to automatically convert into the Company’s common stock in February 2007. Additionally, Cornell was entitled to convert all or part of the principal and interest balance of the Debenture into the Company’s common stock equal to the lowest closing bid price for the three trading days immediately preceding the conversion date. The Company recorded the Debenture as a component of equity as loan fees related to standby equity distribution agreement to be amortized over the life of the Distribution Agreement. The Company amortized $63,808 during the year ended December 31, 2004.
Due to the termination of the Distribution Agreement, the Company does not expect the Debenture to be satisfied and determined to reverse the prior amortization of the loan fees, and removed the loan fees against the Debenture. The Company determined with legal council that payment of the Debenture through conversion of common stock is not probable due to Cornell declining to fund the Company’s request pursuant to the Distribution Agreement.
In addition to the termination, the Company determined the cost of seeking the return of the remaining 867,030 shares held in escrow by Cornell would exceed the value of the stock. Accordingly, unless further action is sought by Cornell, the Company released the shares and recorded an expense for the release totaling $31,213.
NOTE 8 - SECURED CONVERTIBLE DEBENTURES
In February 2004, the Company issued a Secured Convertible Debenture to Cornell secured by all Company assets. Upon closing, the Company received $250,000. The balance bears an interest rate of 5.0%, with principal and interest automatically converting to shares of the Company’s common stock in February 2007. Cornell has the option of converting this loan to common stock, at the lower of a) fifty-two cents per share($0.52), or b) 80% of the lowest closing bid price of the common stock for the five trading days immediately preceding the conversion date. In May 2004, the Company issued a second Secured Convertible Debenture to Cornell totaling $250,000 with the same terms as the February 2004 Secured Convertible Debenture. The Company recorded the estimated value of the conversion feature totaling $125,000 to interest expense.
During January 2005, the Company converted the remaining principal balance of $75,000 and accrued interest of $18,497 on the convertible debentures into 3,541,537 shares of the Company’s common stock. As of March 31, 2005, the outstanding balance of the convertible debentures totaled $-0-.
NOTE 9 - OTHER LIABILITIES
Stock liability - During the quarter ended March 31, 2005, the Company entered into several stock sales with the Potterburg Group to provide cash to cover short term needs. The Company generally issues the stock for the cash advances, generally within 30 days after the receipt of the funds by the Company. As of March 31 2005, Potterburg had one remaining cash advance for $76,000 for which the stock had not been issued on. Accordingly, the balance of $76,000 is recorded as part of other liabilities in the accompanying balance sheet as of March 31, 2005 totaling $217,087. (See Note 12 for issuance)
LIMELIGHT MEDIA GROUP, INC.
(FORMERLY SHOWINTEL NETWORKS, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
Common Stock Purchase Agreement - During October 2003, the Company entered into a Common Stock Purchase Agreement (“Purchase Agreement”) with an individual whereby the Company agreed to issue 5,000,000 shares of its common stock in exchange for cash totaling $150,000. The Purchase Agreement also granted the individual an option to purchase an additional 3,333,000 shares of the Company’s common stock at $0.03 per share.
During October 2003, the Company entered into an Employment Agreement with this same individual, whereby the Company employed the individual as an operations manager for the term of three years. The individual is entitled to compensation of $15,000 per month with the option to receive payment in the Company’s common stock. Such shares would be determined by the bid price on the last day of the month preceding the date the salary was due. The Employment Agreement terminates during October 2006. However, the Company at its option may terminate the agreement but shall pay the individual’s accrued salary, unreimbursed expenses, and all other compensation and benefits through the first six months or the termination date, whichever is greater.
Also during October 2003, the Company entered into a Consulting Agreement with this same individual whereby the individual would provide other services not set forth in the Employment Agreement in exchange for 1,000,000 shares of the Company’s common stock totaling $109,000. The Consulting Agreement terminates during October 2006.
As of March 31 2005, the individual paid $30,699 of the total $150,000 required under the Purchase Agreement. The Company rescinded all agreements with the individual as the individual did not pay the entire $150,000 as required by the Purchase Agreement and attempted to return the $30,699. The individual refused to accept the funds and filed a suit against the Company as discussed in Note 9. The Company has recorded the $30,699 has part of other liabilities totaling $217,087.
During February 2002, a consultant alleged claims against the Company for non-payment related to a consulting services agreement. The Company was unable to secure adequate financing to engage the consultant and no services were rendered however the consultant claims payments totaling $93,000 remain due. A default judgment was entered in favor of the consultant however execution of the judgment had not occurred due to misidentification of the Company. During April 2004, execution of the judgment was made whereby the Company was held liable for the $93,000 plus interest. As of March 31 2005, the total amount owed of $110,388 has been recorded as part of other liabilities totaling $217,087.
Eric Nelson - During the year ended December 31, 2003, the Company terminated their agreement with Eric Nelson. Mr. Nelson sued and won a judgment for unpaid services totaling $42,000.
During July 2004, the Company received $100,000 from the third party entity who attempted to exercise Mr. Nelson’s warrants. The original exercise price of the warrants was $1.50; however as an incentive to the entity to purchase and exercise the warrants, the Company repriced the exercise price to $0.20. The third party entity was unable to complete the purchase of the warrants from Mr. Nelson and the funds were delivered to the Company. Mr. Nelson demanded payment of his judgment totaling $42,000, as the terms of the agreement to forgive the remaining debts owed were not followed.
During February 2005, the Company entered into a settlement agreement with Erik Nelson whereby the Company agreed to pay $30,000 in satisfaction of the $42,000 liability and a general release of all amounts owed to Mr. Nelson which resulted in a gain of $12,000 recorded as part of Gain (loss) related to settlement and judgments. Additionally, the Company and Mr. Nelson entered into a general release whereby Mr. Nelson surrendered 490,000 Class A warrants and 500,000 Class B warrants to the Company in exchange for 100,000 shares of the Company’s common stock totaling $6,550 recorded as part of Gain (loss) related to settlement and judgments.
LIMELIGHT MEDIA GROUP, INC.
(FORMERLY SHOWINTEL NETWORKS, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
During February 2005, the Company and Lion Partners, LTD (“Lion Partners”) entered into a promissory note whereby Lion Partners loaned the Company $60,000. The promissory note is unsecured, bearing an interest rate of 10% per annum, and due on August 15, 2005. The Company used $30,000 of the proceeds to pay Erik Nelson as discussed in the above paragraph. Additionally, the Company repriced the Class A Warrants and Class B Warrants previously held by Mr. Nelson. The warrants to purchase 990,000 shares of the Company’s common stock were exercised by Lion Partners as full satisfaction of all obligations of the Company under the promissory note totaling $60,000. Pursuant to the Black-Scholes Model, the Company recognized interest expense of $4,845 related to the warrants granted to Lion Partners.
Other - During March 2005, the Company issued 500,000 shares of the Company’s common stock in satisfaction of the $100,000 other liability received during July 2004 which attempted to exercise Mr. Nelson’s warrants, as discussed above.
NOTE 10 - STOCKHOLDERS’ DEFICIT
Stock issuance - During January and March 2005, the Company issued 4,444,164 shares of its common stock for accounts payable totaling $66,821 (excluding interest of $312,819) at $0.09 per share.
During February and March 2005, the Company issued 1,470,000 shares of its common stock in satisfaction of loans payable totaling $54,500 (excluding interest of $56,000 and accrued interest of $1,300) at $0.08 per share.
During March 2005, the Company issued 100,000 shares of its common stock for interest at $0.08 per share.
During March 2005, the Company cancelled 150,000 shares of its common stock.
NOTE 11 - ACQUISITION
During March 2005, the Company entered into an agreement to acquire 10,200,000 shares of common stock or 51% of OTR Media (“OTR”), which includes fixed assets and intellectual property. Management is currently determining the fair value of this property. As consideration for the 10,200,000 shares, the Company will assume financial and operational responsibility of OTR commencing on April 15, 2005.
As of March 31, 2005, liabilities of OTR consists of accounts payable and accrued liabilities approximating $143,000 and notes payable approximating $75,000. The Company plans to satisfy these liabilities through the continuing operations of OTR and the sale of OTR’s fixed assets for approximately $70,000. Additionally, the Company is negotiating the satisfaction of the notes payable with the issuance of the Company’s common stock.
LIMELIGHT MEDIA GROUP, INC.
(FORMERLY SHOWINTEL NETWORKS, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 12 - SUBSEQUENT EVENTS
During April 2005, the Company issued 926,829 shares of common stock in exchange for the other liability totaling $76,000 (See Note 9).
During May 2005, the Company cancelled 1,170,000 shares of common stock related to the IGS agreement as discussed in Note 4 to the financial statements included in the 2004 Form 10-KSB.
During May 2005, the Company entered into a consulting agreement with Lion Partners. With the acceptance of the agreement Lion Partners was issued 11,769,932 shares of common stock at $0.05 per share valued at $588,496. After the issuance Lion Partners disclosed it was unable to meet its contractual obligations in the consulting agreement and notified the company they would be returning the shares issued to them. These shares are still pending receipt by the Company.
During May 2005, the Company concluded the consultant involved with the Cornell transactions, Vintage Filings, had received excess common stock totaling 4,793,000 which were returned.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
General
The following discussion and analysis of the financial condition and results of operations should be read in conjunction with our financial statements and notes appearing elsewhere in this Report.
Recent Developments
As we previously reported in a Current Report on Form 8-K filed with the Securities and Exchange Commission on March 17, 2005, in the fiscal quarter ended March 31, 2005, we acquired 10.2 million shares of common stock of OTR Media, Inc., a Nevada corporation (“OTR”), representing 51% of the outstanding capital stock of OTR. OTR is a privately-held company based in Bowling Green, Kentucky that providesoutdoor advertising services primarily through the placement of mobile billboards on tractor trailers.The acquisition was effected pursuant to a Stock Purchase Agreement, dated as of March 11, 2005, by and between our company and OTR. In consideration for the shares, we agreed to assume financial and operational control and responsibility of OTR from and after April 15, 2005.
Results of Operations
Revenue. For the three months ended March 31, 2005 and 2004, we had no revenue.During these periods, we conducted limited operations as we sought funding opportunities to allow us to fully commence operations and implement our business strategy.Under our current business strategy, we plan to sell advertising time on our network of video displays that we plan to locate within supermarkets and other retail venues that license their space to us (called ‘location hosts’). Advertisers will pay us a negotiated fee for our services and we will pay a percentage of such fee as a license fee to the location hosts that agree to house our video network equipment.
Management believes our long-term success will be dependent in large part on our ability to add new location hosts to enable us to attract more advertisers and increase our sales of advertising time on our network. However, we believe our ability to add additional new location hosts is dependent on our ability to obtain additional capital to fund new business development, purchase equipment and increase our sales and marketing staff. We are currently in discussions with a number of supermarket chains and other retailers in an effort to reach agreements under which we can license space for the installation of our video display network. While there can be no assurance that we will do so, we believe we will be successful in negotiating agreements with a number of such chains and other retailers.
Cost of Revenue. Due to our limited operations as discussed above, we had no cost of revenue for the three months ended March 31, 2005 and 2004.
General and Administrative Expenses. For the three months ended March 31, 2005, we incurred general and administrative expenses of $114,160 as compared to $1,870,414 for three months ended March 31, 2004, a decrease of $1,756,254, or approximately 94%. This decrease was primarily attributable to adecrease of $1,344,752, or approximately 99%, in the amount of consulting fees we paid, to $1,364 for the three months ended March 31, 2005 from $1,346,116 for the three months ended March 31, 2004. Additionally, our other general and administrative expenses decreased to $96,659 for the three months ended March 31, 2005 from $516,997 for the three months ended March 31, 2004, a decrease of $420,338, or approximately 81%. Such decreased expenses resulted primarily from the costs we incurred in the three months ended March 31, 2004 relating to the issuance and sale of convertible securities and the preparation of a registration statement under the Securities Act of 1933 relating to the shares issuable upon conversion of such convertible securities.
Interest Expense. For the three months ended March 31, 2005, we incurred interest expense of $516,250 as compared to $370,731 for three months ended March 31, 2004, an increase of $145,519, or approximately 39%.
Net Income (Loss). We incurred a net loss of $653,526 for the three months ended March 31, 2005 as compared to a net loss of $2,241,145 for the three months ended March 31, 2004.
Liquidity and Capital Resources
At March 31, 2005, we had a cash balance of $48,586. Issuances of convertible debt and equity securities have been our principal source of liquidity since the inception of our current line of business in April 2001.We are still in the early stages of executing our business strategy.Our current cash levels, together with the cash flows we generate from operating activities, are not sufficient to enable us to execute our business strategy. As a result, we intend to seek additional capital through the sale of shares of our common stock to institutional investors or other ‘accredited investors’ in private placements. If we are unsuccessful in our efforts to raise additional capital, our operations would likely continue at their current level, which do not generate sufficient revenue to meet our expenses. In such event, we may be forced to liquidate our company.
We are currently in preliminary discussions with an institutional lender to obtain a bridge loan in the amount of $1 million. We anticipate that the closing of such financing will be contingent upon, among other conditions, our execution of definitive agreements to acquire one or more companies engaged in digital signage or a related business. There can be no assurance that we will be able to consummate the proposed financing transaction or any such acquisitions, or that any such transaction or acquisitions will be consummated on terms favorable to us. Even if we successfully obtain such bridge financing, any net proceeds will likely provide us with sufficient working capital to sustain operations for a period of only nine to 12 months. We will still require additional capital to effectuate our business strategy of expanding our digital video network by increasing the number of our location hosts, of which there can be no assurance.
As we seek and negotiate new financing and acquisition transactions, we anticipate that our level of operations will be continue to be nominal. In the interim, we continue to explore new licensing opportunities with potential location hosts in anticipation of receiving additional capital.
At March 31, 2005, we had liquid assets of $48,932, consisting of cash and accounts receivable derived from operations. Long-term assets of $193,498 consisted primarily of computer servers and video display equipment used in operations.
Current liabilities of $1,005,174 at March 31, 2005 consisted primarily of $753,087 of accounts payable and accrued expenses, including related party amounts.
Our working capital deficit was $956,242 as of March 31, 2005 for the reasons described above.
During the three months ended March 31, 2005, we used net cash of $70,690 in operating activities.
During the three months ended March 31, 2005, we used net cash of $2,344 in investing activities, primarily for capital expenditures.
Financing activities, consisting primarily of proceeds from the sale and issuance of notes, provided net cash of $121,347 during the three months ended March 31, 2005.
ITEM 3. CONTROLS AND PROCEDURES.
DISCLOSURE CONTROLS AND PROCEDURES. Our management, with the participation of our chief executive officer and chief financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this report. Based on such evaluation, our chief executive officer and chief financial officer has concluded that, as of the end of such period, our disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by us in the reports that it files or submits under the Exchange Act.
INTERNAL CONTROL OVER FINANCIAL REPORTING. There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during theperiod covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
In January 2005, we issued 777,777 shares of our common stock to a vendor in satisfaction of outstanding accounts payable of $25,000 (excluding interest of $10,000). The shares were issued in reliance on the exemption from registration provided by Section 4(2) of the Securities Act of 1933, as amended, on the basis that such issuance did not involve a public offering, no underwriter fees or commissions were paid in connection with such issuance and such vendor represented to us that it was an ‘accredited investor’.
In January 2005, we issued 838,721 shares of our common stock to one of our directors in satisfaction of indebtedness of $30,193 due under a promissory note. The shares were issued in reliance on the exemption from registration provided by Section 3(a)(9) of the Securities Act of 1933, as amended, on the basis that the note was exchanged for shares of our common stock and no commission or other remuneration was paid for soliciting such exchange.
In January 2005, we issued 5,022,475 shares of our common stock to our Chief Executive Officer and Chairman of our board of directors in satisfaction of indebtedness of $475,382 due under a promissory note. The shares were issued in reliance on the exemption from registration provided by Section 3(a)(9) of the Securities Act of 1933, as amended, on the basis that the note was exchanged for shares of our common stock and no commission or other remuneration was paid for soliciting such exchange.
In January 2005, we issued 2,053,125 shares of our common stock to our Chief Executive Officer and Chairman of our board of directors in satisfaction of indebtedness of $52,500 (plus interest of $21,412) due under a promissory note. The shares were issued in reliance on the exemption from registration provided by Section 3(a)(9) of the Securities Act of 1933, as amended, on the basis that the note was exchanged for shares of our common stock and no commission or other remuneration was paid for soliciting such exchange.
In January 2005, we issued 4,766,718 shares of our common stock to six employees in satisfaction of indebtedness for accrued salaries of $101,875 (plus interest of $72,146). The shares were issued in reliance on the exemption from registration provided by Section 4(2) of the Securities Act of 1933, as amended, on the basis that such issuance did not involve a public offering, no underwriter fees or commissions were paid in connection with such issuance and two of such persons were ‘accredited investors’ as defined in Regulation D under the Securities Act of 1933, as amended, and four of such persons had access to the same kind of information as would be included in a registration statement under the Securities Act of 1933, as amended.
In January 2005, we issued 372,429 shares of our common stock to a lender upon conversion of indebtness of $10,000 due under a convertible promissary note. The shares were issued in reliance on the exemption from registration provided by Section 3(a)(9) of the Securities Act of 1933, as amended, on the basis that the note was exchanged for shares of our common stock and no commission or other remuneration was paid for soliciting such exchange.
In January 2005, we issued an aggregate of 1,700,000 shares of our common stock to two lenders in satisfaction of indebtedness of $20,400 due under promissory notes. The shares were issued in reliance on the exemption from registration provided by Section 3(a)(9) of the Securities Act of 1933, as amended, on the basis that the notes were exchanged for shares of our common stock and no commission or other remuneration was paid for soliciting such exchanges.
In January 2005, we issued 3,125,000 shares of our common stock to a vendor in consideration of services rendered to us valued at $100,000. The shares were issued in reliance on the exemption from registration provided by Section 4(2) of the Securities Act of 1933, as amended, on the basis that such issuance did not involve a public offering, no underwriter fees or commissions were paid in connection with such issuance and such vendor represented to us that it was an ‘accredited investors’ as defined in Regulation D under the Securities Act of 1933, as amended.
In February 2005, we issued 145,000 shares of our common stock to a lender in satisfaction of indebtedness of $5,800. The shares were issued in reliance on the exemption from registration provided by Section 4(2) of the Securities Act of 1933, as amended, on the basis that such issuance did not involve a public offering, no underwriter fees or commissions were paid in connection with such issuance and such lender represented to us that it was an ‘accredited investor’ as defined in Regulation D under the Securities Act of 1933, as amended.
In March 2005, we issued 990,000 shares of our common stock to an institutional lender upon the cashless exercise of immediately exercisable warrants that were issued in March 2005 to such lender in satisfaction of indebtness of $60,000 (plus interest of $4,845). The shares were issued in reliance on the exemption from registration provided by Section 3(a)(9) of the Securities Act of 1933, as amended, on the basis that the warrants were exchanged for shares of our common stock and no commission or other remuneration was paid for soliciting such conversion.
In March 2005, we issued 500,000 shares of our common stock to an investor in a private placement for an aggregate purchase price of $100,000. The shares were issued in reliance on the exemption from registration provided by Section 4(2) of the Securities Act of 1933, as amended, on the basis that such issuance did not involve a public offering, no underwriter fees or commissions were paid in connection with such issuance and such investor represented to us that he was an ‘accredited investor’ as defined in Regulation D under the Securities Act of 1933, as amended.
In March 2005, we issued 100,000 shares of our common stock to a lender in satisfaction of interest of $8,000 due under a promissory note. The shares were issued in reliance on the exemption from registration provided by Section 3(a)(9) of the Securities Act of 1933, as amended, on the basis that the warrants were exchanged for shares of our common stock and no commission or other remuneration was paid for soliciting such conversion.
In March 2005, we issued an aggregate of 3,666,387 shares of our common stock to a vendor in satisfaction of accrued payables of $46,666 (plus interest of $297,974). The shares were issued in reliance on the exemption from registration provided by Section 4(2) of the Securities Act of 1933, as amended, on the basis that such issuance did not involve a public offering, no underwriter fees or commissions were paid in connection with such issuance and such vendor represented to us that it was an ‘accredited investor’ as defined in Regulation D under the Securities Act of 1933, as amended.
In March 2005, we issued 650,000 shares of our common stock to a vendor in satisfaction of accrued accounts payable of $23,897 (plus interest of $37,203). The shares were issued in reliance on the exemption from registration provided by Section 4(2) of the Securities Act of 1933, as amended, on the basis that such issuance did not involve a public offering, no underwriter fees or commissions were paid in connection with such issuance and such vendor represented to us that it was an ‘accredited investor’ as defined in Regulation D under the Securities Act of 1933, as amended.
ITEM 6. EXHIBITS.
The exhibits required by this item are listed on the Exhibit Index attached hereto.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Dated: May 24, 2005 | | LIMELIGHT MEDIA GROUP, INC. |
| | | |
| | | By:/s/ David V. Lott |
| | | David V. Lott |
| | | Chief Executive Officer(principal executive officer, Chief Financial Officer(principal financial and accounting officer) |
EXHIBIT INDEX
| 31.1 | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| 32.1 | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
