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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2001
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from _________________to _____________
Commission File No.: 000-27777
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Blagman Media International, Inc.
(successor registrant to MNS Eagle Equity Group I Inc.)
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its Charter)
Nevada 91-192-3501
-------------------------- --------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1901 Avenue of the Stars,
Suite 1710, Los Angeles, CA 90067
-------------------------------------------- --------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: 310.788.5444
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Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(G) of the Act:
COMMON STOCK --$.001 PAR VALUE
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. YES [X] NO [ ]
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 30,793,450 shares of common
stock as of April 30, 2001
Transitional Small Business Disclosure Format (check one): YES [ ] NO [X]
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INDEX
BLAGMAN MEDIA INTERNATIONAL, INC.
PAGE
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements............................................................... 1
Consolidated Balance Sheet As Of
March 31, 2001 (Unaudited) and
December 31, 2000 ................................................................. 2
Consolidated Statements Of Operations
For The Nine Months And Three Months Ended
March 31, 2001 And 2000 (Unaudited)................................................ 3
Consolidated Statement Of Cash Flows
For The Three Months Ended
March 31, 2001 And 2000 (Unaudited)................................................ 4
Notes To Consolidated Financial Statements As Of
March 31, 2001 (Unaudited)......................................................... 5
Item 2. Management's Discussion and Analysis of
Results of Operations.............................................................. 6
PART 2. OTHER INFORMATION
Item 1. Legal Proceedings.................................................................. 10
Item 2. Changes in Securities and Use of Proceeds.......................................... 10
Item 3. Default Upon Senior Securities..................................................... 10
Item 4. Submission of Matters to a Vote of Security Holders................................ 10
Item 5. Other Information.................................................................. 10
Item 6. Exhibits and Reports on Form 8-K................................................... 10
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ITEM 1. BLAGMAN MEDIA INTERNATIONAL, INC.
AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2001
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BLAGMAN MEDIA INTERNATIONAL, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
March 31, 2001 December 31,
(Unaudited) 2000
-------------- ------------
CURRENT ASSETS
Cash $ 16,755 $ 179,744
Accounts receivable 32,650 15,569
Other current assets -- 2,974
Prepaid insurance 26,579 21,884
Note and loan receivable - stockholder 124,345 120,448
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Total Current Assets 200,329 340,619
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PROPERTY AND EQUIPMENT - NET 67,945 71,737
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OTHER ASSETS
Deposits 4,456 4,456
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Total Other Assets 4,456 4,456
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TOTAL ASSETS $ 272,730 $ 416,812
=========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES
Notes and loans payable - current portion $ 63,768 $ 77,449
Deferred revenue 150,000 250,000
Accounts payable and accrued expenses 919,399 463,066
Media cost refunds payable 8,598 33,287
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Total Current Liabilities 1,141,765 823,802
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STOCKHOLDERS' DEFICIENCY
Common stock, $.001 par value, 100,000,000 shares authorized, 25,718,450 and 25,718 22,403
22,403,450 shares issued and outstanding, respectively
Additional paid-in capital 4,173,450 3,951,540
Accumulated deficit (4,832,869) (4,165,599)
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(633,701) (191,656)
Subscriptions receivable (235,334) (215,334)
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Total Stockholders' Deficiency (869,035) (406,990)
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TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY $ 272,730 $ 416,812
=========== ===========
See accompanying notes to consolidated financial statements.
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BLAGMAN MEDIA INTERNATIONAL, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
For The Three For The Three
Months Ended Months Ended
March 31, 2001 March 31, 2000
---------------- --------------
REVENUES - NET $ 129,236 $ (18,161)
COST OF REVENUES 4,371 (3,864)
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GROSS PROFIT (LOSS) 124,865 (14,297)
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OPERATING EXPENSES
Officers' compensation 179,167 74,500
Employee compensation and taxes 60,100 39,081
Professional and consulting fees 312,770 91,854
Travel and entertainment 24,095 57,920
Commissions 72,046 23,569
Other general and administrative 56,077 38,698
Advertising 43,125 27,237
Rent 19,976 7,628
Auto 12,920 594
Telephone 6,432 6,701
Depreciation 3,792 1,894
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Total Operating Expenses 790,500 369,676
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LOSS FROM OPERATIONS (665,635) (383,973)
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OTHER INCOME (EXPENSE)
Interest expense (3,029) (4,039)
Interest income 1,394 912
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Total Other (Expense) (1,635) (3,127)
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NET LOSS $ (667,270) $ (387,100)
- -------- ============ ============
NET LOSS PER COMMON SHARE - BASIC AND DILUTED $ (0.03) $ (0.03)
============ ============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC AND DILUTED 23,528,061 12,566,740
============ ============
See accompanying notes to consolidated financial statements.
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BLAGMAN MEDIA INTERNATIONAL, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS CASH FLOWS
(UNAUDITED)
For The Three For The Three
Months Ended Months Ended
March 31, 2001 March 31, 2000
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net (Loss) $(667,270) $(387,100)
Adjustments to reconcile net (loss) to net cash (used in) operating
activities:
Depreciation 3,793 1,894
Stock issued for compensation and services 185,225 --
Changes in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable (17,081) 370,395
Other current assets (1,722) (20,719)
Increase (Decrease) in:
Accounts payable and accrued expenses 330,760 (201,393)
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Net Cash (Used In) Operating Activities (166,295) (236,923)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment -- (19,311)
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Net Cash (Used In) Investing Activities -- (19,311)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from stock issuance 20,000 791,666
Proceeds from stockholder loan 85,987 --
Payments to stockholder (89,000) (3,500)
Loans payable (13,681) --
Line of credit repayment -- (74,713)
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Net Cash Provided by Financing Activities 3,306 713,453
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NET INCREASE (DECREASE) IN CASH (162,989) 457,219
CASH - BEGINNING OF PERIOD 179,744 --
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CASH - END OF PERIOD $ 16,755 $ 457,219
- ------------------- ========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
- -------------------------------------------------
Cash paid during the period for - Interest $ 3,029 $ 4,039
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See accompanying notes to consolidated financial statements.
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BLAGMAN MEDIA INTERNATIONAL, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2001
(UNAUDITED)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION
The accompanying unaudited financial statements have been prepared in
accordance with accounting principles generally accepted in the United
States of America and the rules and regulations of the Securities and
Exchange Commission for interim financial information. Accordingly,
they do not include all the information necessary for a comprehensive
presentation of financial position and results of operations.
It is management's opinion, however that all material adjustments
(consisting of normal recurring adjustments) have been made which are
necessary for a fair financial statements presentation. The results
for the interim period are not necessarily indicative of the results
to be expected for the year.
For further information, refer to the financial statements and
footnotes for the year ended December 31, 2000 included in the
Company's Form 10-KSB filed April 16, 2001.
NOTE 2 STOCK ISSUANCES
In January 2001, the Company issued 500,000 shares of common stock for
$40,000, which was recorded as subscriptions receivable. The Company
also received $20,000 for stock that was subscribed to at December 31,
2000.
During February and March of 2001, the Company issued 2,815,000 shares
of common stock with a fair value of $185,225 for services performed.
NOTE 3 NEW SUBSIDIARY
On February 28, 2001, the Company incorporated a wholly owned
subsidiary, Blagman USA, Inc., for the purpose of initiating future
mergers. The subsidiary has had no activity for the period ended March
31, 2001.
NOTE 4 SUBSEQUENT EVENT
The Company had a share purchase agreement (the "Agreement") to
acquire all of the outstanding stock of Mercury Media. The Agreement
had an automatic termination date of April 30, 2001, if it was not
exercised or extended. During meetings in April 2001, Mercury advised
the Company that it was uncertain about the transactions. Given this
development, the Company & Mercury are not pursuing the transaction.
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ITEM 2. MANAGEMENT'S DISCUSSION
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ANALYSIS OF RESULTS OF OPERATIONS
GENERAL
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Blagman Media International, Inc. ("the Company") was incorporated on
January 29, 1999 as a successor to a sole proprietorship. The Company is a
global direct response marketing and advertising agency that produces
response-driven infomercials, and provides product placement, media buying,
medical marketing, production and syndication of television programming, and
other associated transactional media business products.
On August 2, 1999, the Company completed a reverse acquisition with Unisat,
Inc., an inactive, public non-reporting company, founded in 1962 and formerly
known as Combined Companies, Inc. On the same date, Unisat, Inc. changed its
name to Blagman Media International, Inc. The transaction was structured as a
share exchange, in which Robert Blagman exchanged all of his shares in Blagman
Media International, Inc., a privately-held entity with the same name owned by
Robert Blagman for 8,200,000 common shares of Unisat, Inc. In April 2000, the
Company entered into a share exchange agreement with MNS Eagle Equity Group I
("MNS"), an inactive, reporting Nevada corporation, which resulted in the
Company becoming the parent entity. After the filing of a Report on Form 8-K,
the Company became the successor reporting entity. References in this 10-QSB to
the Company refer to both of the Blagman entities and to MNS Eagle Equity Group
I, the other wholly-owned subsidiary of the Company. The corporate relationships
are the result of transactions in 1999 and 2000, through which the Company
became the reporting, trading, development stage Nevada corporation with shares
publicly traded on the NASDAQ Bulletin Board Exchange.
RESULTS OF OPERATIONS
- ---------------------
THREE MONTHS ENDED MARCH 31, 2001 COMPARED TO THREE MONTHS ENDED MARCH 31, 2000
As noted above, the operating aspects of the business are conducted
principally through Blagman Media (the operating subsidiary) and the operations,
in all material respects, compare the results for that entity during the three
months ended March 31, 2000 to the combined entities during the three months
ended March 31, 2001.
Net Revenues (principally from advertising placements, commissions and
revenue sharing arrangements) for the three month period ended March 31, 2001 as
compared to the same period in 2000 increased from a negative $18,161 to
$129,236 (812%). The increase is due to the additional media placements of two
clients and reflects normal business activity.
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The increase in total operating expenses of $420,824 (114%) consisting
principally of professional fees incurred in connection with proposed
acquisitions and public company reporting, officers' compensation incurred (but
not paid), travel, entertainment and other operating costs from $369,676 during
the three months ended March 31, 2000 to $790,500 for the three months ended
March 31, 2001 resulted in a loss (before other expenses of $3,127 in 2000 and
of $1,635 in 2001) of $665,635 in operating loss in 2001 compared to $383,973
for the three month period in 2000 or a 128% increase in operating losses.
During the three months ended March 31, 2001, the Company issued 2,815,000
common shares valued at $185,225 as compensation for prior services to various
consultants and professionals. Under GAAP, the Company is required to record
these amounts as a compensation expense based on the market price of the
Company's shares on the date of issuance, even though no cash payments were
made. As a result, the Company recorded $185,225 in non cash compensation, which
has been reflected as a portion of both the Professional and Consulting Fees and
Other General and Administrative Expenses (collectively, "Non-Cash
Compensation").
The increase in operating costs also resulted from the Company's status as
a public entity and the substantial professional fees and related travel and
other expenses incurred in connection with the negotiations and documentation
for prospective acquisitions. While certain public company costs have been
moderated, the burden of public company status continues to require major
commitments of time, energy and resources of the Company's very limited
management team and, to some extent, the public company requirements have
pre-empted the core business of the Company because executives were required to
devote a substantial portion of their time to the public aspects of the Company
rather than to day-to-day sales and marketing activities for the Company. As
predicted in prior reports, the increased use of the computer tracking system
and technology systems, by management's increased experience with public company
status which has allowed them to redirect more of their efforts to day-to-day
operating activities and the retention of professionals familiar with public
company requirements generally have mitigated these issues. Also, management
believes that it has primarily addressed the cumulative effects of the direct
and indirect Non-Cash Compensation and other equity commitments and dilution
matters which arose from the Unistat and MNS transactions and from the Company's
early experiences as a public entity and from deferrals of cash compensation by
officers and consultants. During this quarter, the Company devoted a substantial
portion of its time to pursuing the possible transactions in which it would have
acquired the interests in Mercury Media International, Inc. ("Mercury") and
Century Media, Inc. ("Century"). As indicated in the press release dated May 3,
2001, the Company has announced that the Mercury transaction is not being
pursued in its
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current format and that negotiations with Century are continuing, but no
definitive agreements have been reached. However, the Company believes that
properly-structured industry consolidations are likely to occur and that the
Company needs to pursue transactions that offer appropriate consolidation
opportunities in the direct marketing and direct response sectors.
COST OF REVENUES
- ----------------
Cost of revenues (principally consisting of media acquisition and airtime
costs accrued in the period) for the three months ended March 31, 2001 increased
from negative $3,864 to $4,371. As a general matter, the Company incurs media
costs in direct proportion to operating revenues and, therefore, the increase in
costs was principally related to the increase in advertising revenues. Gross
profit increased from a loss of $14,297 for the three months ended March 31,
2000 to a profit of $124,865 for the three months ended March 31, 2001.
GENERAL AND ADMINISTRATIVE EXPENSES
- -----------------------------------
Total general and administrative expenses increased from $369,676 to
$790,500 (114%) for the three month period ended March 31, 2001. The increase
consisted principally of professional fees incurred for the proposed
acquisition, the additional accrued salaries and travel and entertainment during
the period (although substantial salaries and professional fees have not been
paid). In fact, as of March 31, 2001, actual compensation paid in cash to
officers was $31,000 and total accrued and unpaid fees to officers were
$148,167. Expenditures increased in each category to accommodate the public
company requirements and the expanded staffing and overhead costs to accommodate
the public status and the sales and advertising personnel added when certain
executives shifted a portion of their efforts from sales and marketing to public
company matters, all of which were partially offset by the savings from computer
tracking. The Company anticipates that the other increases will moderate in
future periods as management gains experience overseeing a publicly held
enterprise and is able to manage and predict those costs and needs more
effectively.
INTEREST EXPENSE AND OUTSTANDING LOANS
- --------------------------------------
Net interest expense after interest income in the three month periods was
not a significant item and decreased from $3,127 to $1,635 (48%). Since the
Company records revenues as received and generally commits to time expenditures
only when there is assurance of payment from its clients, interest costs and
advertising revenue adjustments are small. At March 31, 2001, the Company had
loans of $124,345 due from shareholders who have deferred salary and have
received certain short term advances, and taken advances from the Company.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
For the three months ended March 31, 2001, compared to December 31, 2000,
the Company's available cash decreased from $179,744 to $16,755 (91%) and
current assets
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decreased from $340,169 to $200,329 (41%) from December 31, 2000 to March 31,
2001. However, the accounts payable and accrued expenses at March 31, 2001 was
$919,399 compared to $463,066 at December 31, 2000, a 99% increase due to
renegotiation of a new office lease and a new copier lease and accrued
professional fees. At March 31, 2001, media cost refunds payable had decreased
to $8,598 from $33,287 in December 31, 2000 due to improved media practices.
Those shifts in accounts receivable and accounts payable were the result of the
impact of the loss of the large insurance company account, the initial impact
from new accounts and improved internal controls. Management anticipates that
additional accounts now being acquired by the Company will replace all, or a
substantial portion, of the lost revenues from the insurance account and that a
significant portion of those revenues will be recognized during the balance of
2001, but there is no assurance that the Company will be successful in fully
offsetting the lost account.
Management is currently pursuing various initiatives to expand the
Company's operations internally and through strategic alliances or acquisitions
with other industry partners. These endeavors will require additional capital
funding which the Company hopes to raise through debt or equity financing
arrangements, if appropriate financing is available, on reasonable and accepted
terms.
The Company is actively seeking additional working capital to meet its
operating requirements and to provide further capital for expansion,
acquisitions or strategic alliances with businesses that are complementary to
the Company's long term business objectives. While the Company believes that
additional capital will be needed to maintain the growth plans of the Company,
management believes that the working capital now available to it along with
funds generated from operations should be sufficient to meet capital
requirements for the next 12 months even if substantial additional working
capital does not become available. However, there is no assurance that these
prospects will be realized and the Company therefore is operating subject to
concerns about its future viability.
NEW ACCOUNTING PRONOUNCEMENTS
- -----------------------------
The Financial Accounting Standards Board has adopted several notices with
regard to the treatment of interim financial statements. These issues are
presented in the Company's interim financial statements. As discussed in the
notes to the interim financial statements, the implementation of these new
pronouncements is not expected to have a material effect on the financial
statements.
YEAR 2000 STATEMENT
- -------------------
The Company has verified that all internal software used in the operations
of the Company and related developments are Year 2000 compliant. The Company
sees no risk at this time pertaining to Year 2000, and internal company
operations.
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FORWARD-LOOKING STATEMENTS
- --------------------------
Safe Harbor statement under the Private Securities Litigation Reform Act of
1995: Except for historical information contained herein, the matters discussed
in this filing are forward-looking statements that involve risks and
uncertainties, including but not limited to economic, competitive, governmental
and technological factors affecting the Company's operations, markets, products
and prices and other factors discussed in the Company's various filings with the
Securities and Exchange Commission.
PART 2. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
During the three months ended March 31, 2001, the Company issued 3,935,000
common shares and recorded $0 from the issuance which, along with receipt of a
subscription receivable, resulted in a total shareholders deficit of $869,035 at
March 31, 2001 compared to a deficit of $406,990 at December 31, 2000. The
additional capital was applied to meet working capital requirements.
ITEM 3. DEFAULT UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Press Release dated May 3, 2001 regarding Mercury Media
International, Inc. and Century Media, Inc.
(b) Reports on Form 8-K
None
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Issuer has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BLAGMAN MEDIA INTERNATIONAL, INC.
Dated: May 20, 2001 /s/ ROBERT BLAGMAN
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Robert Blagman, President
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