FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ............. to ..............
Commission File Number 000-25385
PURCHASE POINT MEDIA CORPORATION
(Exact name of registrant as specified in its charter)
MINNESOTA 41-1853993
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
141 FIFTH AVENUE, NEW YORK, NEW YORK 10010
(212) 539-6104
(Address and telephone number, including area code, of
registrant's principal executive office)
(Former name, former address and former fiscal year, if changed
since last report)
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
-----
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
At February 15, 2000, there were 11,409,577 shares of Common Stock, no
par value, outstanding.
PURCHASE POINT MEDIA CORPORATION
INDEX
Page
----
Part I. Financial Information 1
Item 1. Financial Statements
Balance Sheets as of December 31, 1999
(unaudited) and June 30, 1999 2
Statements of Operations and for the Six and Three Months
Ended December 31, 1999 and 1998 (unaudited) and the Period
June 28, 1996 (Date of Formation) through December 31, 1999 3
Statements of Cash Flows for the Six
Months Ended December 31, 1999 and
1998 (unaudited) and the Period June
28, 1996 (Date of Formation) through
December 31, 1999 4 - 5
Notes to Financial Statements (unaudited) 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
or Plan of Operations 7
Part II. Other Information
Item 1. Legal Proceedings 9
Item 6. Exhibits and Report on Form 8-K 9
Signatures 10
PART I. Financial Information
Item 1. Financial Statements
Certain information and footnote disclosures required under
generally accepted accounting principles have been condensed or omitted from the
following financial statements pursuant to the rules and regulations of the
Securities and Exchange Commission. It is suggested that the following
consolidated financial statements be read in conjunction with the year-end
financial statements and notes thereto included in the Company's Annual Report
on Form 10-KSB for the year ended June 30, 1999.
The results of operations for the six months ended December 31,
1999, are not necessarily indicative of the results to be expected for the
entire fiscal year or for any other period.
1
PURCHASE POINT MEDIA CORPORATION
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
ASSETS
December 31, June 30,
1999 1999
------------ --------
Unaudited)
------------
Current Assets:
Cash $ -- $ 97
Prepaid expenses 16,179 18,487
---------- --------
Total Current Assets 16,179 18,584
Equipment - net 4,101 2,810
Patents and trademarks - net 26,219 27,159
--------- --------
TOTAL ASSETS $ 46,499 $ 48,553
========= ========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current Liabilities:
Notes payable $ 46,903 $ 46,903
Accounts payable and
accrued expenses 183,095 163,014
Due to officer/shareholder 115,770 86,130
Due to related parties 519,370 508,407
--------- ---------
Total Current Liabilities 865,138 804,454
--------- ---------
Long-term debt 131,555 -
--------- ---------
Total Liabilities 996,693 804,454
--------- ---------
Stockholders' Deficiency:
Preferred stock; no par value -
authorized 50,000,000 shares
outstanding 2,000 shares, at
redemption value 170 170
Common stock, no par value -
authorized, 100,000,000 shares,
issued and outstanding 11,409,577
and 11,375,000 shares 260,497 260,497
Additional paid in capital 23,104 23,104
Deficit accumulated during
development stage (1,233,965) (1,039,672)
---------- ----------
Total Stockholders' Deficiency (950,194) (755,901)
---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' DEFICIENCY $ 46,499 $ 48,553
========== ==========
2
PURCHASE POINT MEDIA CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
Period
June 28, 1996
(Date of
Six Months Ended Three Months Ended Formation)
December 31, December 31, through
------------ ------------ December 31,
1999 1998 1999 1998 1999
------ ------ ------ ------ -------
(Unaudited) (Unaudited) (Unaudited)
Costs and Expenses:
General and administrative
expenses $ 164,791 $ 225,410 $ 96,976 $ 84,599 $1,104,287
Interest expense 28,223 18,838 15,254 9,534 123,103
Depreciation and
amortization 1,279 1,552 653 779 6,575
---------- ---------- -------- -------- ---------
Net loss $ 194,293 $ 245,800 $ 112,883 $ 94,912 $1,233,965
========== ========== ======== ======== =========
Loss per common share -
basic and diluted $ .02 $ .02 $ .01 $ .01 $ --
===== ===== ===== ===== =====
Weighted average number of
common shares and
equivalents outstanding
- basic and diluted 11,409,571 11,375,000 11,409,571 11,375,000 --
========== ========== ========== ========== =========
3
PURCHASE POINT MEDIA CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
Period
June 28, 1996
Six Months Ended (Date of
December 31, Formation)
------------ through
1999 1998 December 31, 1999
------ ------ -----------------
(Unaudited) (Unaudited)
Cash flows from operating activities:
Net (loss) $(194,293) $(245,800) $(1,233,965)
Adjustments to reconcile
net (loss) to net cash
(used in) operating
activities:
Depreciation and
amortization 1,279 1,552 6,575
Forgiveness of debt
from related parties -- -- (25,000)
Non cash compensation 2,308 11,305 32,095
Changes in operating assets and liabilities:
(Increase) decrease in
other assets -- -- (5,143)
Increase in accounts
payable and accrued
expenses 20,081 20,539 183,095
--------- -------- ----------
Net Cash (Used in)
Operating Activities (170,625) (212,404) (1,042,343)
---------- -------- ----------
Cash flows from investing activities:
Purchase of equipment (1,630) -- (4,752)
---------- -------- -----------
Cash flows from financing activities:
Proceeds from related
party 56,762 168,348 787,231
Proceeds from borrowings 131,555 -- 178,458
Proceeds from officer/
stockholder 57,063 4,038 189,564
4
PURCHASE POINT MEDIA CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS (continued)
Period
June 28, 1996
Six Months Ended (Date of
December 31, Formation)
------------ through
1999 1998 December 31, 1999
------ ------ -----------------
(Unaudited) (Unaudited)
Payments to officer/
stockholder (27,424) (15,396) (73,795)
Payments to related parties (45,798) (125,259) (286,360)
Proceeds from sale of
common stock -- -- 251,997
Deposit received for
issuance of shares -- 182,000 --
-------- ------- ---------
Net Cash Provided by
Financing Activities 172,158 213,731 1,047,095
-------- ------- ---------
Net increase (decrease)
in cash (97) 1,327 --
Cash - beginning of period 97 -- --
-------- ------- ---------
Cash - end of period $ -- $ 1,327 $ --
======== ======= =========
Supplementary Information:
Cash paid during the year
for:
Interest $ 667 $ 551 $ 1,700
======== ======= =========
Income taxes $ -- $ -- $ --
======== ======= =========
Non-cash investing activities:
Acquisition of business
Fair value of assets
acquired $ -- $ 8,500 $ 8,500
======== ======= =======
Forgiveness of related
party loan $ -- $ 25,000 $ 25,000
======== ======= =======
Issuance of warrants in
connection with the sale
of common stock $ -- $ -- $ 23,104
======== ======= =======
5
PURCHASE POINT MEDIA CORPORATION
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
The balance sheet as of December 31, 1999, and the consolidated
statements of operations and cash flows for the six months ended
December 31, 1999 and 1998 have been prepared by the Company and are
unaudited. In the opinion of management, all adjustments (consisting of
normal recurring adjustments) necessary to present fairly the financial
position, results of operations and comprehensive income (loss) and
cash flows for all periods presented have been made. Certain items in
the December 31, 1998 financial statements have been reclassified to
conform to December 31, 1999 classifications. The information for June
30, 1999 was derived from audited financial statements.
2. BASIS OF PRESENTATION
The accompanying consolidated financial statements have been
prepared on a going concern basis, which contemplates the realization
of assets and the satisfaction of liabilities in a normal course of
business.
The Company's primary planned activities are the development and
marketing needed to create, produce and sell advertising space to
national advertisers to be displayed on grocery cart displays. At
December 31, 1999, operations had not yet commenced and no revenue has
been derived; accordingly, the Company is considered a development
stage enterprise. There is no assurance that the selling of advertising
space to national advertisers will be developed or that the Company
will achieve a profitable level of operation.
The development activities of the Company are being financed
through advances by a major shareholder The Company's continued
existence is dependent upon its ability to obtain needed working
capital through additional equity and/or debt financing and the
commencement of its planned principal operations. Management is
actively seeking additional capital to ensure the continuation of its
development activities. However, there is no assurance that additional
capital will be obtained. These uncertainties raise substantial doubt
about the ability of the Company to continue as a going concern.
The financial statements do not include any adjustments relating to
the recoverability and classification of recorded asset amounts or the
amounts and classifications of liabilities that might be necessary
should the Company be unable to continue as a going concern.
3. EARNINGS (LOSS) PER SHARE
Basic earnings (loss) per common share are computed using the
weighted average number of common shares outstanding during the period.
Diluted earnings per common share are computed using the weighted
average number of common shares and potential common shares outstanding
during the period.
6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The Company's quarterly and annual operating results are affected by a
wide variety of factors that could materially and adversely affect
revenues and profitability, including competition from other suppliers;
changes in the regulatory and trade environment; changes in consumer
preferences and spending habits; the inability to successfully manage
growth; seasonality; the ability to introduce and the timing of the
introduction of new products and the inability to obtain adequate
supplies or materials at acceptable prices. As a result of these and
other factors, the Company may experience material fluctuations in
future operating results on a quarterly or annual basis, which could
materially and adversely affect its business, financial condition,
operating results, and stock price. Furthermore, this document and
other documents filed by the Company with the Securities and Exchange
Commission (the "SEC") contain certain forward-looking statements under
the Private Securities Litigation Reform Act of 1995 with respect to
the business of the Company. These forward-looking statements are
subject to certain risks and uncertainties, including those mentioned
above, and those detailed in the Company's Annual Report on Form 10-KSB
for the year ended June 30, 1999, which may cause actual results to
differ significantly from these forward-looking statements. The Company
undertakes no obligation to publicly release the results of any
revisions to these forward-looking statements which may be necessary to
reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events. An investment in the Company
involves various risks, including those mentioned above and those which
are detailed from time to time in the Company's SEC filings.
Results of Operations
The following table sets forth for the periods indicated, the
percentage increase or (decrease) of certain items included in the
Company's consolidated statement of operations:
% Increase (Decrease) from Prior Period
----------------------------------------
Six Months Ended Three Months Ended
December 31, 1999 December 31, 1999
compared with 1998 compared with 1998
------------------- ------------------
General and administrative
expense (26.9)% 14.6%
Interest expense 49.8 60.0
Net (loss) (21.0) (16.2)
7
To finance operations, PPMC will attempt to pre-sell four of the 10
ad spaces in "the last word"(R) at $6,308,000 each (an aggregate of
approximately $25 million) for a period of one year (representing a
substantial discount). There can be no assurance that PPMC will be
successful in doing so.
For PPMC to launch a successful advertisement service program,
there must be eight areas of the business staffed by competent people
to handle each of the areas. In that PPMC does not have the resources
or expertise at this time, PPMC has elected to subcontract with parties
that have either the expertise or infrastructure in place to initiate
and sustain a successful operation. The eight areas are; (1)
manufacturing "the last word"(R), (2) marketing, (3) selling
advertising, (4) selling stores on the program, (5) installing "the
last word"(R) (6) printing the advertisement inserts, (7) maintenance
and changing inserts and (8) administration. The above will be
subcontracted out with the exception of administration.
Manufacturing will be handled by Jack Burnett through his company,
Tynex Consulting Ltd. Mr. Burnett has over 32 years of experience in
all facets of injection molding and extrusion processes. His
responsibilities will include but not be limited to R&D, tooling and
subcontracting out the manufacturing (by injection molding and
extrusion processes) on a competitive bid basis.
Marketing will be handled by Chris Culver of Culver and Associates,
an advertising and marketing company. They had Actmedia's (PPMC's
competitor) account when Actmedia was bought out by News Corp. Culver
and Associates' responsibilities will include putting together media
kits (for ad agencies, packaged foods industry and grocery stores) and
advertising PPMC's advantages in the trade journals that reach the
packaged foods industry, ad agencies and grocery retailers.
Advertising sales and chain store operations will be handled by
Last Word Management. John Hall and Dal Brickenden have over 50 years
of experience in selling and managing advertising operations. LWM's
responsibilities will include selling the ads that go into "the last
word"(R), installation and maintenance of "the last word"(R) and the
changing of the ad inserts.
Printing will be handled by established printing companies based on
competitive biding.
Administration will be handled in house by Mrs. E.V. (Ev) Arnold,
CPA. Mrs. Arnold has over 20 years of experience in administration in
the government, private and public sectors.
The primary administrative function will be to monitor, evaluate,
supervise and direct the subcontractors. "the last word"(R) will be
warehoused at a distribution center where the first ad inserts will be
inserted into "the last word"(R) prior to being shipped to ITG's people
at the store level. The printing company thereafter will ship the ad
inserts directly to ITG's people at the store level.
8
Year 2000
The Year 2000 problem is the result of computer programs being
written using two digits (rather than four) to define the applicable
years. Any of the Company's programs that have time-sensitive software
may recognize a date using "00" as the year 1900 rather than the year
2000, which could result in miscalculations or system failures.
The Company has conducted a review to identify, evaluate and
implement changes to computer systems and applications necessary to
achieve a year 2000 date conversion with no effect on customers or
disruption to business operations. The Company will also be
communicating with suppliers, financial institutions and others with
which it conducts business to coordinate year 2000 conversions. The
total cost of compliance and its effect on the Company's future results
of operations will be determined as a part of this project. Based on
initial review, the total cost is not expected to have a material
effect on the Company's results of operations or financial statements.
However, there can be no assurance that the systems of other companies
on which the Company may rely will be timely converted or that such
failure to convert by another company would not have an adverse effect
on the Company's systems.
PART II. Other Information
Item 1. Legal Proceedings
See Item 3 of the Company's Annual Report on Form 10-KSB for the
year ended June 30, 1999.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits: Exhibit 27.1 Financial Data Schedule.
(b) There were no Current Reports on Form 8-K filed by the
registrant during the quarter ended December 31, 1999.
9
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: February ___, 2000
PURCHASE POINT MEDIA CORPORATION
By: /s/ Albert P. Folsom
-----------------------------------------
Albert P. Folsom
President and Chief Executive Officer
10