ANNUAL REPORT FOR SMALL BUSINESS ISSUERS SUBJECT
TO THE 1934 ACT REPORTING REQUIREMENTS
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2001
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______ to _______.
Commission File No. 001-15407
STREAMEDIA COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 22-3622272
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
244 West 54th Street, 12th Floor New York, NY 10019
(Address of principal executive offices)
(212) 445-1700
(Registrant's telephone number, including area code)
___________________________
(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.
(X)Yes ( )No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable date:
As of March 23, 2001, the Company had 7,221,691 shares of Common Stock
issued and outstanding.
INDEX TO FINANCIAL STATEMENTS
Part 1 - Financial Information
Page
Item 1 - Financial Statements
Balance Sheets as of March 31, 2001 (unaudited) and December 31, 2000 F-2
Statements of Operations for the three months ended March 31, 2001
and 2000, and Cumulative from January 13, 1998 (date of inception)
through March 31, 2001 (unaudited) F-3
Statement of Stockholders' Equity (Deficit) for the three months ended
March 31, 2001 (unaudited) F-4
Statements of Cash Flows for the three months ended March 31, 2001
and 2000, and Cumulative from January 13, 1998 (date of inception)
through March 31, 2001 (unaudited) F-5
Notes to Financial Statements F-7 - F-13
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Directors of Streamedia Communications, Inc.
(a development stage company)
I have reviewed the accompanying balance sheet of Streamedia Communications,
Inc
(a development stage company) as of March 31, 2001, and the related statements
of
operations, stockholders equity and of cash flows for the three months
ended March
31,
2000 and 2001. These financial statements are the responsibility of the
Company's
management.
I have conducted my review in accordance with standards established by the
American
Institute of Certified Public Accountants. A review of interim financial
information
consists principally of applying analytical procedures to financial data and
making
inquiries of persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with
auditing standards
generally accepted in the United States, the objective of which is the
expression of
an opinion regarding the financial statements taken as a whole. Accordingly,
I do not
express such an opinion.
Based on my review, I are not aware of any material modifications that should
be made
to the accompanying consolidated interim financial statements referred to
above for
them to be in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that
will continue
as a going concern. As more fully described in Note B, the Company has incurred
operating losses since the date of inception and requires additional capital to
continue operations. These conditions raise substantial doubt about the
Company's
ability to continue as a going concern. Management's plans as to these
matters are
described in Note B. The financial statements do not include any adjustments
to reflect
the possible effects on the recoverability and classification of assets or the
amounts
and classifications of liabilities that may result from the possible inability
of
Streamedia Communications, Inc. (a development stage company) to
continue as a going
concern.
S/Thomas Monahan CPA
_____________________________________
Thomas Monahan Certified Public Accountant
Paterson, New Jersey
August 15, 2001
Streamedia Communications, Inc.
(A Development Stage Company)
BALANCE SHEETS
168:
Unaudited
March 31,
December 31,
ASSETS
2001
2000
CURRENT ASSETS
Cash and cash equivalents
$ 3,764
$104,142
Restricted cash
0
88,891
Accounts receivable, net of allowance for doubtful accounts of
$0 and $114,000 at March 31, 2001 and December 31,
2000, respectively
27,000
57,179
Licenses, net of accumulated amortization of $444,406 and $376,000
at March 31, 2001 and December 31,2000,respectively
4,016
72,422
Prepaid expenses
84,147
138,477
Total current assets
118,927
461,111
PROPERTY AND EQUIPMENT, net
1,840,495
1,760,309
OTHER ASSETS
_______5,333
________
TOTAL ASSETS
$ 1,964,755
$ 2,221,420
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses
$ 938,185
$ 805,919
Subordinated convertible promissory note
0
250,208
Accrued payroll
146,812
134,212
Current maturities of capital lease obligations
59,320
59,320
Total current liabilities
1,144,317
1,249,659
CAPITALIZED LEASE OBLIGATIONS, less current maturities
8,931
8,931
STOCKHOLDERS' EQUITY
Preferred stock, $.001 par value; authorized - 100,000
shares; 0 issued and outstanding at March 31, 2001 and
December 31, 2000,
respectively
Common stock, $.001 par value; authorized 20,000,000 shares;
issued and outstanding - 6,505,044 and 5,880,044 shares at
March 31, 2001 and December 31, 2000, respectively
7,959
5,880
Additional paid-in capital
13,503,870
12,538,898
Deficit accumulated during development stage
(12,700,322)
(11,581,948)
Total stockholders' equity
811,507
962,830
TOTAL LIABILITIES ANDSTOCKHOLDERS' EQUITY
$ 1,964,755
$ 2,221,420
The accompanying notes are an integral part of
these statements.
Streamedia Communications, Inc.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(unaudited)
(a)
Cumulative
From Jan. 13,
1998(date of
Three months ended March,31
inception) to
2001
2000
March 31,2001
Revenue
$ 123,264
$ 7,344
$ 830,619
Cost of goods sold
Direct cost
49,305
2,938
332,248
Gross margin
73,959
4,406
498,371
Operating expenses
General and administrative
495,536
669,221
4,970,622
Payroll and related expenses
399,429
767,463
5,540,052
Product development
0
23,024
614,848
Depreciation and amortization
295,362
222,282
1,536,903
Total operating expenses
1,190,327
1,681,990
12,662,425
Operating loss
(1,116,368)
(1,677,584)
(12,164,054)
Other income (expense)
Interest expense
(2,241)
(6,576)
(670,056)
Interest income
235
71,813
133,788
Total other income (expense)
(2,006)
65,237
(536,268)
Net loss
$(1,118,374)
$(1,612,347)
$(12,700,322)
Basic and diluted loss per common share
$ ( .18)
$(.34)
$ 2.59).
Weighted average shares outstanding, basic and diluted
6,296,711
4,730,044
4,900,662
The accompanying notes are an integral part of these statements.
Streamedia Communications, Inc.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
(unaudited)
Deficit
accumulated
Additional
during
Preferred stock
Common stock
paid-in
development
Shares
Amount
Shares
Amount
capital
stage
Total
Balance at January 1, 2001
$
5,880,044
$ 5,880
$12,538,898
$(11,581,948)
$ 962,830
Issuance of common stock for services (Jan. 9, 2001)
913,687
914
350,029
350,943
Issuance of common stock pursuant to the exercise
of stock options (Jan. 9, 2001)
625,000
625
249,375
250,000
Issuance of common stock for business
Acquisition (Jan. 9, 2001)
540,000
540
365,568
366,108
Net loss for the period
(1,118,374)
(1,118,374)
Balance at March 31, 2001
$
7,958,731
$ 7,959
$ 13,503,870
$ (12,700,322)
$ 811,507
The accompanying notes are an
integral part of this statement.
Streamedia Communications, Inc.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
Unaudited
Cumulative
from Jan.13,
1998 (date of
Three months ended March 31
inception) to
2001
2000
March 31, 2001
Cash flows from operating activities
Net loss
$(1,118,374)
$(1,612,347)
$(12,700,322)
Adjustments to reconcile net loss to net
cash used in operating activities
Common stock issued for services
39,113
382,473
Stock option granted for services
873,547
Compensatory stock option expense
413,381
Amortization of debt discount
88,288
272,500
Amortization and write-off
of deferred
231,500
Depreciation and amortization
295,362
222,282
1,536,903
Changes in operating assets
Prepaid expenses and other
current
assets
173,400
16,478
(591,001)
Other assets
(5,333)
(16,666)
1,667
Accounts payable and accrued expenses
(105,342)
(566,683)
720,898
________
Net cash used in operating activities
(760,287)
(1,829,535)
(8,744,884)
Cash flows from investing activities
Purchase of property and equipment
(307,142)
(1,010,432)
(2,744,727)
Net cash used in investing activities
(307,142)
(1,010,432)
(2,744,727)
Cash flows from financing activities
Issuance of common stock, net of associated costs
299,200
970,963
Issuance of common stock in Offering, net of associated
Costs/Private Placement, net of assoc. cost
9,045,497
Proceeds from the exercise of stock options
350,943
75,000
758,743
Acquisition of eLeaders, Inc. in exchange of stock
366,108
366,108
Proceeds of notes payable and common stock warrants, net
of associated costs
1,583,500
Repayments of notes payable
(1,815,000)
Deferred offering costs
75,000
Conversion of loans into capital
250,000
552,189
Principal payments on capital lease obligations
(2,538)
(43,625)
Net cash provided by financing activities
967,051
371,662
11,493,375
Net (decrease) increase in cash
(100,378)
(2,468,305)
3,764
Cash and cash equivalents at beginning
of period
104,142
6,693,061
0
Cash and cash equivalents at end of period
$ 3,764
$ 4,224,756
$ 3,764
Supplemental Information:
Cash paid for interest
2,241
6,576
670,056
Conversion of debt into common stock
250,000
552,189
Common stock issued for acquisition
366,108
366,108
The accompanying notes are an integral part
of these statements.
Streamedia Communications, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 2001
(unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted principles for interim financial
information.
Accordingly, they do not include all of the information and footnotes
required by
generally accepted accounting principles for complete financial statements.
In the
opinion of management, all necessary adjustments (consisting of normal
recurring accruals)
considered necessary for a fair presentation have been included. Operating
results of
Streamedia Communications, Inc. (the "Company") for the three months ended
March 31, 2000
and 2001 are not necessarily indicative of the results that may be expected for
the fiscal
year ending December 31, 2001.
The balance sheet as of March 31, 2001 and the related statements of operations
for the three-month periods ended March 31, 2001 and 2000, and cumulative from
January 13,
1998 (date of inception) to March 31, 2001, stockholders' equity for the
three-month
period ended March 31, 2001 and cash flows for the three-month periods ended
March 31, 2001
and 2000, and cumulative from January 13, 1998 (date of inception) to March 31,
2001,
have been prepared by the Company without audit. In the opinion of management,
all
adjustments (which include only normal, recurring accrual adjustments)
necessary to
present fairly the financial position as of March 31, 2001 and for all periods
presented
have been made.
Certain information and footnote disclosures, normally included in financial
statements prepared in accordance with accounting principles generally
accepted in the
United States of America have been condensed or omitted. These financial
statements
should be read in conjunction with the financial statements and notes thereto
included
in the Annual Report on Form 10-KSB for the year ended December 31, 2000.
Results of
operations for the period ended March 31, 2001 are not necessarily indicative
of the
operating results expected for the full year.
NOTE B - NATURE OF OPERATIONS
Streamedia Communications, Inc. (the "Company") was incorporated in the State of
Delaware in 1998. The Company's two divisions are The Streamedia Networks
and Business
Services. In December 1999, the Company completed its initial public offering
(the "Offering"). The net proceeds from the Offering were approximately
$8,447,000.
Streamedia Communications, Inc
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (continued)
March 31, 2001
(unaudited)
NOTE B (continued)
The Company is in the development stage. The Company provides website owners
and content publishers with services and tools for streaming, or broadcasting,
live
and on demand video and audio content over the Internet. The Company also
operates a
broadcast content website, Bijou Cafe.com.
The Streamedia Business Services division markets Internet and intranet
broadcasting
services to a wide spectrum of enterprises, such as, but not limited to,
businesses,
associations, electronic publishers and "off-line" media generators,
which
are attempting
to obtain an Internet broadcast presence.
The Company offers consulting services to businesses, corporations, and
agencies
that wish to broadcast or otherwise transmit high-quality video and audio over
the Internet.
It also offers broader digital solutions. Streamedia provides end-to-end
solutions
which integrate into the client's existing infrastructure. Streamedia Digital
Solutions
is a suite of business solutions that utilize digital technologies to improve
communications between its clients and their customers, employees and others.
The Company's operations are subject to certain risks and uncertainties,
including actual
and
potential competition by entities with greater financial resources, experience
and market
presence, risks associated with the development of the Internet market,
risks associated
with consolidation in the industry, the need to manage growth and expansion,
certain
technology and regulatory risks and dependence upon sole and limited suppliers.
The accompanying financial statements have been prepared on the basis
that the Company
will continue as a going concern which assumes the realization of assets and
settlement
of liabilities in the normal course of business. Since inception, the
Company has
devoted substantially all of its efforts to developing its business. The
Company has
therefore incurred substantial losses and negative cash flows from operating
activities
as reflected in these financial statements. Accordingly, the Company has r
elied
primarily upon obtaining equity capital and debt financing to support its
operations.
The Company does not expect revenue to exceed costs and expenses in 2001 and,
accordingly, will continue to incur losses and negative cash flows from
operating
activities. To address financing needs, the Company is pursuing various
financing
and other alternatives including a Plan and Agreement of Merger with HOA
Networks Corp.
and HOA Acquisition Corp. described in Note C. These circumstances raise
substantial
doubt about the Company's ability to continue as a going concern. The
accompanying
financial statements do not include any adjustments that might result from
the outcome
of this uncertainty.
Streamedia Communications, Inc
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (continued)
March 31, 2001
(unaudited)
NOTE C - ACQUISITIONS
In January 2001, the Company completed the acquisition of eLeaders, Inc.
("eLeaders")
through a stock-for-stock, tax-free reorganization. Under the terms of the
acquisition,
the Company exchanged 520,000 shares of the Company's unregistered common
stock for all
of eLeaders' common stock. eLeaders provided a warranty that liabilities to be
assumed
would not exceed $81,000. eLeaders, which was incorporated in 1998, designs
business-to-business solutions to improve supply lines and internal
communications,
and aggregates customers by affinity interests or geographic location to
amplify
marketing results.
In April 2001, the Company signed a Plan and Agreement of Merger
("Merger Agreement")
with HOA Networks Corp. ("HOAN") and HOA Acquisition Corp. ("HAC").
Pursuant to the
terms of the Merger Agreement, HOAN will merge with HAC, with HOAN being
the surviving
company and all of the capital stock of HOAN will be canceled in exchange for
stock of
the Company. HOAN will be the surviving corporation in such merger and the
business of
the surviving company will be conducted under the name of Streamedia
Communications, Inc.
Upon the effective date of the merger, each outstanding share of stock
beneficially
owned by all shareholders excluding principals of HOAN will be converted into
the common
stock of the Company on a 4-for-1 share basis. Each outstanding share of
common stock
beneficially owned by principals will be converted wherein 100% of HOAN shares
will be
exchanged for 80% shares of the Company. It is anticipated that the effective
date of
the merger will be on or about August, 2001.
NOTE D - LOSS PER SHARE
Basic and diluted net loss per share is computed by dividing net loss by the
weighted-average
number of common shares outstanding during each period. The incremental
shares from
assumed exercises of stock options and warrants are not included in the
calculation of
diluted loss per share since their effect would be antidilutive. As of March
31, 2001
and December 31, 2000, the calculation of diluted net loss per share
excludes an
aggregate 2,559,021 shares of common stock issuable upon exercise of
warrants and
stock options.
Streamedia Communications, Inc
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (continued)
March 31, 2001
(unaudited)
NOTE E - DEBT
Subordinated Convertible Promissory Note
On December 28, 2000, the Company issued a Subordinated Convertible
Promissory Note
(the "Note") for an aggregate principal amount of $250,000 bearing interest at
10% per
annum. The outstanding principal plus accrued interest was due and payable
forty-five
days from the date of the Note (the "Original Maturity Date"), which was
subject
to
extension. The note may be extended ninety additional days by either
party upon
written
notice no less than five days prior to the Original Maturity Date.
On the Original Maturity Date, or any time thereafter if the Note had been
extended,
the lender could convert the unpaid principal plus accrued and unpaid interest
into the number of whole shares of unregistered, unrestricted common stock
of the
Company equal to the Voluntary Conversion Amount divided by $0.40
(the "Conversion Price").
Upon maturity of the Note, either the Original Maturity Date or as extended,
the
unpaid
principal plus accrued interest (the "Mandatory Conversion Amount")
shall automatically
convert into the number of shares of conversion stock equal to the Mandatory
Conversion
Amount divided by the Conversion Price ($0.40). The Note converted into
625,000 shares
of common stock on February 12, 2001, which shares were issued on March
21, 2001.
The party that arranged for this financing received a fee of $25,000, which
was charged
to
operations during the year ended December 31, 2000.
Notes Payable
On March 2, 2001 and February 21, 2001, the Company issued promissory notes
aggregating approximately $50,000 and $97,879, respectively, bearing interest
at the
rate of 10% per annum from the date of the promissory note or before the
sooner of (i)
ninety days after the date of the promissory note or (ii) forty-five days
after
written
demand is made by the holder of the note. These promissory notes are
collateralized by
913,600 shares of the Company's unregistered, restricted common stock.
Streamedia Communications, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 2001
(unaudited)
NOTE F - INCOME TAXES
The Company provides for the tax effects of transactions reported in the
financial
statements.
The provision if any, consists of taxes currently due plus deferred taxes
related
primarily to differences between the basis of assets and liabilities for
financial
and income tax reporting. The deferred tax assets and liabilities, if any,
represent
the future tax return consequences of those differences, which will either
be taxable
or deductible when the assets and liabilities are recovered or settled. As
of December
31, 2000, the Company had no material current tax liability, deferred tax
assets, or
liabilities to impact on the Company's financial position because the
deferred tax asset
related to the Company's net operating loss carry forward and was fully
offset by a
valuation allowance.
At December 31, 2000, the Company has net operating loss carry forwards
for income
tax purposes of $11,581,948. These carry forward losses are available to offset
future
taxable income, if any, and expire in the year 2010. The Company's utilization
of this
carry forward against future taxable income may become subject to an annual
limitation
due to a cumulative change in ownership of the Company of more than 50 percent.
The components of the net deferred tax asset as of December 31, 2000
are as follows:
Deferred tax asset:
Net operating loss carry forward $11,581,948
Valuation allowance ($11,581,948)
Net deferred tax asset $-0-
The Company recognized no income tax benefit for the loss generated for the
period
from inception, January 13, 1998, to December 31, 2000. SFAS No. 109 requires
that a
valuation allowance be provided if it is more likely than not that some portion
or all
of a deferred tax asset will not be realized. The Company's ability to realize
benefit
of its deferred tax asset will depend on the generation of future taxable
income.
Because the Company has yet to recognize significant revenue from the sale of
its products,
the Company believes that a full valuation allowance should be provided.
Streamedia Communications, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 2001
(unaudited)
NOTE G - COMMITMENTS AND CONTINGENCIES
Legal Proceedings
The Company is subject to various claims and proceedings that occur in the
ordinary
course of business. Based on information currently available, the Company
believes that
none of these current claims or proceedings, either individually or in the
aggregate,
will have a material effect on the business.
On March 20, 2001, the Company received notice from the Nasdaq Listings
Qualifications
Panel that its common stock would no longer be listed on the Nasdaq SmallCap
Market
effective with the close of business on March 28, 2001. The panel's action was
based
on the Company's inability to maintain a minimum bid price of $1.00 over the
previous
thirty consecutive trading days. The Company is currently appealing this
decision.
On October 20, 2000, the Company entered into an agreement with its new
President
and Interim Chief Executive Officer. This agreement terminates on December
31, 2001.
The agreement provides, among other things, that the President will be
compensated
$40,000 for the period October 20, 2000 through December 31, 2000 and
$169,000 for
the period January 1, 2001 through December
31, 2001. The agreement also provided for the issuance of 200,000 employee
stock
options that were immediately exercisable at an exercise price of $0.50. On
January 9,
2001, the Company's Board of Directors granted this individual an additional
100,000
employee stock options with an exercise price equal to the closing market
price on the
date of the grant and with 25,000 of such options becoming vested at the close
of each
quarter during the year ending December 31, 2001. In addition, on April 16,
2001, the
Company's Board of Directors granted this individual an additional 1,000,000
employee
stock options with an exercise price equal to the closing market price on the
date
of grant.
The vesting provisions in connection with these options have not, as yet,
been
determined
by the Board of Directors.
On April 4, 2001, the Company accepted the resignation of one of its officers
who also
served as the Chairman of the Company's Board of Directors and entered into
a Severance
and Mutual Release Agreement. This agreement provides, among other
things, that this
former officer's consulting firm will be retained as a consultant to the
Company for a
period of six months following the date of the officer's termination at a
monthly
compensation rate of $12,000.
Streamedia Communications, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 2001
(unaudited)
NOTE H - STOCKHOLDERS' EQUITY
On January 9, 2001 a special board of directors' meeting approved the issuance:
(1) of 625,000 shares of unregistered, restricted shares to Barry Seidman
upon the
conversion of his 250,000 loan to the Company: and (2) to eSynch Corporation
as collateral
for loans made by eSynch to Streamedia of that number of unregistered
restricted
shares
of Streamedia common stock equal to the amount of each loan divided by
one-half the
closing share for Streamedia's common stock on the date of that loan.
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 2001.
The following discussion relates to the results of our operations to date, and
our
financial condition:
This prospectus contains forward looking statements relating to our Company's
future
economic performance, plans and objectives of management for future operations,
projections of revenue mix and other financial items that are based on the
beliefs
of,
as well as assumptions made by and information currently known to, our
management.
The words "expects, intends, believes, anticipates, may, could, should" and
similar
expressions and variations thereof are intended to identify forward-looking
statements.
The cautionary statements set forth in this section are intended to emphasize
that
actual results may differ materially from those contained in any forward
looking
statement.
NATURE OF OPERATIONS
We are in the development stage. We have two primary lines of business:
Internet
Services, and media distribution. The latter is executed via BijouCafe.com, the
equivalent
of a movie theater accessible via the World Wide Web, but which also acts as a
distributor of films offline, such as to theaters, and to video retailers.
Our business services are designed to provide technology and consulting
expertise and
services to traditional media companies, traditional businesses with media
assets,
and online businesses and web sites. Our Streamedia Digital Solutions includes
encoding
services, digital security, video indexing, broadcasting production, web
design
and
back-end technical services. In developing our business services area, we have
acquired
and installed hardware and software that allows us to perform these services for
other
companies. During the quarter ended June 30, 2000, we launched the
Streamedia Digital
Solutions, and began producing revenues. The Quarter ending September 30,
2000 was the
first full quarter of operations. The Streamedia Digital Solutions provides
consulting and
design services relating to the construction of websites or Internet
applications
on the
World Wide Web.
BijouCafe
BijouCafe.com is an independent film and digital entertainment destination
site.
Bijou Cafe
is produced as an online version of an art-house cinema.
BijouCafe is a development stage web site for, producers, actors and small
independent
films to present their materials via internet video streaming. The target
audience
is the
general public who are interested in merging talents in the film industry.
Revenue is based on people subscribing to this website. For the period from
inception
through March 31, 2001, the Company has not yet earned any income.
Business Services
During the first quarter ending March 31, 2001, we completed a merger between
our division,
Streamedia Business Services division, and eLeaders, Inc. Our division markets
Internet and
intranet broadcasting services to a wide spectrum of enterprises, such as, but
not limited
to, businesses, associations, electronic publishers and "off-line" media
generators,
who are attempting to obtain an Internet broadcast presence. We offer
Information
Technology ("IT") consulting services to businesses, corporations, and
agencies that
wish to broadcast or otherwise transmit high-quality video and audio over
the Internet.
Streamedia provides complete IT solutions, which integrate with the
client's existing
infrastructure. Streamedia Digital Solutions are a suite of business
solutions that
utilize digital technologies to improve communications between its clients
and their
customers, employees, and others. The business Services units also
market web design
services, web site hosting, email services, e-commerce solutions, dialup
and broadband
connectivity to the general public as well as to other businesses.
Our operations are subject to certain risks and uncertainties, including actual
and
potential competition by entities with greater financial resources, experience
and
market presence, risks associated with the development of the Internet
markets, risks
associated with consolidation in the industry, the need to manage growth
and expansions,
certain technology and regulatory risks and dependence upon sole and
limited suppliers.
The accompanying financial statements have been prepared on the basis
that we will
continue as a going concern, which assumes the realization of assets and
settlement of
liabilities in the normal course of business. Since its inception, we have
been engaged
in organizational and pre-operating activities. Further, we have generated
nominal
revenues and incurred significant losses.
Continuation of our existence is dependent upon its ability to obtain
additional capital,
secure and execute strategic alliances to develop and sustain profitable
operations.
The uncertainty related to these conditions raises substantial doubt about
our ability
to continue as a going concern. The accompanying financial statements do
not include any
adjustments that might result from the outcome of this uncertainty.
BUSINESS COMBINATIONS
Acquisition of eLeaders, Inc.
In January, 2001, Streamedia acquired eLeaders, Inc.
(WWW.ELEADERS.COM)("Eleaders"),
headquartered in Mineola, NY. Eleaders, , provides hosting, Internet
access (DSL services),
and web site design as part of the core consulting services and
solutions clients' online
business to over 860 clients throughout the U.S., including i-Bank24.com,
Luminant
(Nasdaq: LUMN), Sterling National Bank, Systec, Inc., CoolAudio,
a division of NetGain
(OTC: NTGN.OB), and OrbitTravel.com (OTC: OBTV.OB). eLeaders,
Inc. was founded in 1998
and in its first two years of operation experienced substantial growth.
eLeaders designs business-to-business solutions to improve supply lines
and internal
communications, and aggregates customers by affinity interests or
geographic location to
amplify marketing results. Its high-speed connectivity services and web
design capabilities
provide an important addition to Streamedia's product and service offerings.
The merger was a stock-for-stock exchange. As such, both companies intend
the transaction be accounted for as a tax-free organization and pooling of
interests.
Streamedia acquired all of eLeaders' assets, including its web hosting and
streaming
contracts and equipment, DSL contracts and equipment, and its Internet and
information
technology consulting business. As consideration, Streamedia gave
eLeaders 520,000
shares of Streamedia common stock in exchange for all issued and
outstanding stock of
eLeaders. This agreement was the product of an arms' length negotiation
with Mr. Richard
Mittasch, the sole stockholder of eLeaders. There was no material
relationship between
Streamedia and either eLeaders or Mr. Mittasch prior
to the acquisition.
Anticipated Merger with HOA Networks Corp.
On April 11, 2001, we signed a Plan and Agreement of Merger
("Merger Agreement") with
HOA Networks and HOA Acquisition Corp. ("HAC"). The merger is
between HOA Networks,
HOA Acquisition Corp. ("HAC"), and our Company. Pursuant to the terms
of the Merger
Agreement, HOAN will merge with HAC with HOAN being the surviving
company and all of
the capital stock of HOAN will be exchanged for stock of the Company.
HOAN will be the
surviving corporation in such merger and the business of the surviving
company will be
conducted under the name of Streamedia Communications, Inc. Upon
the effective date of
the merger, each outstanding share of stock beneficially owned by all
shareholders
excluding principals of HOAN will be converted into the common stock of
the Company on
a 4 for 1 share basis. Each outstanding share of common stock
beneficially owned by
principals will be converted as follows: 100% of HOAN shares will be
exchanged for 80%
shares of our Company. It is anticipated that the effective date of the
merger will be
on July 15, 2001.
Securing financing to begin the operating phase
For the period from inception, January 13, 1998, to September 30, 2000,
we have raised
a total
of approximately $14 million from the sale of common stock and the
placement of debt
(before underwriting discounts and offering costs). We completed our
nitial public
offering on December 27, 1999, and repaid $1,878,125 in debt and interest.
Net of costs,
we raised $12,320,000.
We completed our Initial Public Offering on December 27, 1999. Prior to
this date we
completed only limited progress and development of our technological
infrastructure
and recruited only six technical and managerial employees . Subsequent
to the completion
of the offering we concentrated on developing an infrastructure for video
and audio
streaming and to recruit and hire technical personnel to design, implement,
and maintain
these systems. The initial phase of this build-out was substantially
completed in the
second quarter of 2000.
Building of streaming infrastructure
Revenues for the three month period ended March 31, 2001 total $123,264.
For the period
ended March 31, 2000 the revenues were $7,344. The revenues were
primarily generated from
our performance of Internet professional services.
The streaming infrastructure consists of various local and wide area
networks capable of
streaming and storing large amounts of audio and video files. We have
implemented
networked environments for development, staging, and actual broadcast
to the public
over the Internet. The system combines sophisticated network architecture
to develop
and deliver our content as well as a system to store files to be streamed.
Developing and refining our business model
We devoted time to refining our business model prior to commencing actual
operations.
We disciplined our SEC filings and regulatory compliance systems. Our
business model
has been built around multiple lines of product and services with multiple
revenue
sources. We originally contemplated four business lines, which have
since been
consolidated into two main revenue divisions built around the types of
clients that each
division services. The first division, the Streamedia Networks division,
consists of the
Bijou Cafe and targets the Internet user; the second, our Business Services
division,
is aimed at corporate clients.
RESULTS OF OPERATIONS
REVENUES
Revenues increased by $115,920 or 1,578% to $123,264 for the three months
ended March 31,
2001, as compared to $7,344 for the comparable period of 2000.
Revenues for the
three-month period ended March 31, 2001, were primarily generated from
our performance
of Internet professional services, launched in May 2000.
OPERATING EXPENSES.
For the three months ended March 31, 2001, total operating expenses
decreased by
$491,663 or 29% to $1,190,327, as compared to $1,681,990, for the
comparable period
of 2000. The decreases in operating expenses for the three-month period
ended March 31,
2001, were due to cutting operating expenses reducing staff and management
staff in
order to match the reduced income.
LIQUIDITY AND CAPITAL RESOURCES
We incurred net losses every quarter since our inception. We have financed
our operations
primarily
through sales of equity securities and the private placement of debt
instruments.
On
September 6, 2000, Streamedia Communications, Inc. sold 940,000 Shares
of Common Stock
with net aggregate proceeds to us of $931,520 pursuant to a private placement
under
Regulation D, Rule 506 of the Securities Act of 1933, as amended.
For the period from inception, January 13, 1998, to September 30, 2000, we
have raised
a total of approximately $14 million from the sale of common stock and the
placement of
debt (before underwriting discounts and offering costs). We completed our
initial
public offering on December 27, 1999, and repaid $1,878,125 in debt and
interest.
The Company decreased cash from $104,142 at December 31, 2000 to
a cash balance of $3,764 at March 31, 2001. Working capital at March
31, 2001 was negative at $1,025,390. For the three months ended March
31, 2001, working capital was provided by the exercise of stock options
aggregating
$350,943. For the three months ended March 31, 2001, we
expended an aggregate of $307,142 for the purchase of property and
equipment.
During this fiscal year, we intend to focus our efforts on the expansion of our
professional services since we believe that it represents our best short-term
path
to profitability. Bijou Cafe or the Content portion of the business will be
built
out
more gradually, as our resources will be expended on the areas representing
the
potential for greatest return.
To accomplish these objectives, we may need to:
* Make substantial investments in capital equipment, such as web servers,
storage
devices, and other specialized computer and communications equipment,
and
* Hire or otherwise contract with highly specialized personnel to develop,
configure,
administer, and operate Web sites, broadcast equipment and infrastructure
for our
company and our corporate clients.
We plan to acquire additional content that will be broadcast on the Bijou
Cafe.
Current industry conditions render it difficult to secure "exclusive" rights to
numerous classes of content suitable for broadcasting over the Internet.
To the
extent to which we cannot capture exclusive broadcast rights, we will be
in competition
with other web sites attempting to attract audiences by offering some of
the same
programming.
We anticipate that any rise in our industry stature, such as by selling
business to
business services,and supplying third party sites with programming, will
assist us
to further market business to business professional services, and thereby
proportionately
increase our revenue. We expect expenditures to rise in proportion to each
phase of our
build out. While we anticipate increased revenues concurrent with the build
out, delays
in product development or the institution of marketing programs could result
in the risk
of prolonged absence of revenues, profits, or working capital.
Nevertheless, we believe that to accomplish our business objectives we will
have to
continue to expand our operations. However, our limited operating history makes
predictions of our future results of operations difficult to access. To date,
although
we are beginning to generate revenues, we may never achieve profitable
operations. Our
history of net losses raises doubt about our ability to continue operations.
We will need to obtain sufficient additional financing or other working capital
to
fund
our operations.If we do not obtain additional financing or working capital, our
cash
and cash equivalents will not be sufficient to meet our working capital and
capital
expenditure requirements going forward. We will need to sell additional equity
or debt
securities to continue as a going concern.
FACTORS THAT MAY AFFECT OUR BUSINESS, FUTURE OPERATING RESULTS
AND FINANCIAL
CONDITION
You should carefully consider the risks described below together with all of
the
other
information included in this quarterly report on Form 10-Q. The risks and
uncertainties
described below are not the only ones facing our company. If any of the
following
risks
actually occurs, our business, financial condition or operating results could
be
harmed.
In such case, the trading price of our common stock could decline, and you
could
lose all
or part of your investment.
WE HAVE A LIMITED OPERATING HISTORY, WHICH MAKES IT DIFFICULT TO EVALUATE OUR
BUSINESS
We were incorporated in 1998 and have a limited operating history. We have
limited
financial results on which you can assess our future success. Our prospects
must be
considered in light of the risks, expenses and difficulties frequently
encountered
by
growing companies in new and rapidly evolving markets, such as streaming
media software,
media delivery systems and electronic commerce. To address the risks and
uncertainties
faced by our business, we must:
* Establish and maintain broad market acceptance of our products and services
and convert that acceptance into direct and indirect sources of revenues;
* Maintain and enhance our brand name;
* Continue to timely and successfully develop new products, product features
and services and increase the functionality and features of
existing products;
* Develop and maintain strategic relationships to enhance the distribution,
features and utility of our products and services.
Our business strategy may be unsuccessful and we may be unable to address
the risks we face in a cost-effective manner, if at all. If we are unable to
successfully
address these risks our business will be harmed.
WE HAVE A HISTORY OF LOSSES
We have incurred significant losses since our inception. We devote significant
resources to developing, enhancing, selling and marketing our products and
services.
As a result, we will need to generate significant revenues to be profitable
in the
future.
OUR OPERATING RESULTS ARE LIKELY TO FLUCTUATE SIGNIFICANTLY,
WHICH WOULD LIKELY CAUSE OUR STOCK PRICE TO FLUCTUATE
As a result of our limited operating history and the rapidly changing and
uncertain
nature of the markets in which we compete, our quarterly and annual revenues
and operating
results are likely to fluctuate from period-to-period, and period-to-period
comparisons
are not likely to be meaningful. These fluctuations are caused by a number
of factors,
many of which are beyond our control. Our future operating results could fall
below the
expectations of public market analysts or investors, which would likely
significantly
reduce the market price of our common stock. Fluctuations in our operating
results will
likely increase the volatility of our stock price. Our research and
development
and sales
and marketing efforts, and other business expenditures generally, are
partially
based on
predictions regarding certain developments for media delivery and digital
media
distribution. To the extent that these predictions prove inaccurate, our
revenues
may not
be sufficient to offset these expenditures, and our operating results may be
harmed.
In recent periods, many Internet-related companies have experienced financial
difficulties,
in part as a result of their inability to access capital from financial
markets.
This
has
directly or indirectly impacted our current and prospective customers.
The result
is that
some of these companies have ceased operations, some are continuing to
experience financial
difficulty, and sales cycles for some of our customers and potential customers
have taken
longer to close than in the past. In the event that a substantial number
of our
current or
potential customers experience financial difficulties in the future, our
ability
to
increase or maintain sales to such customers will be adversely affected and our
ability to
generate revenues from these companies will also be adversely impacted.
WE MAY BE UNABLE TO SUCCESSFULLY COMPETE IN PARTS OF OUR BUSINESS
Media Hosting. Our media hosting service competes with a variety of companies
that
provide streaming media hosting and broadcast services. These companies
include Yahoo!
Broadcast Services (formerly Broadcast.com), Akamai and other emerging
broadcast
networks. Some of these competitors offer other services that we do not offer.
We
may not establish or sustain our competitive position in this market segment.
OUR INDUSTRY IS EXPERIENCING CONSOLIDATION THAT MAY INTENSIFY COMPETITION
The Internet and media distribution industries have recently experienced
substantial
consolidation and a proliferation of strategic transactions. We expect this
consolidation and strategic partnering to continue. Acquisitions or strategic
relationships could harm us in a number of ways. For example:
* Competitors could acquire or enter into relationships with companies with
which we have strategic relationships and discontinue our relationship,
resulting in the loss of distribution opportunities for our products and
services or the loss of certain enhancements or value-added features to our
products and services;
* Suppliers of important or emerging technologies could be acquired by a
competitor or
other companies which could prevent us from being able to utilize such
technologies in
our offerings, and disadvantage our offerings relative to those of competitors;
* A competitor could be acquired by a party with significant resources and
experience that
could increase the ability of the competitor to compete with our products and
services;
and
* Other companies with related interests could combine to form new, formidable
competition,
which could preclude us from obtaining access to certain markets or content,
or which
could dramatically change the market for our products and services.
WE DEPEND ON KEY PERSONNEL WHO MAY NOT CONTINUE TO WORK FOR US
Our success substantially depends on the continued employment of our
executive officers
and key employees. The loss of the services of any of our other executive
officers
or
key employees could harm our business. If any of these individuals were to leave
us, we
could face substantial difficulty in hiring qualified successors and could
experience a
loss in productivity while any such successor obtains the necessary training and
experience.
None of our executive officers has a contract that guarantees employment. We
do not
maintain "key person" life insurance policies. If we do not succeed in
retaining
and
motivating existing personnel, our business could be harmed.
OUR FAILURE TO ATTRACT, TRAIN OR RETAIN HIGHLY QUALIFIED PERSONNEL
COULD HARM OUR BUSINESS
Our success also depends on our ability to attract, train and retain qualified
personnel
in all areas, especially those with management and product development skills.
In particular,
we must hire additional experienced management personnel to help us continue
to grow
and manage our business, and skilled software engineers. At times, we have
experienced
difficulties in hiring personnel with the proper training or experience,
particularly
in
technical areas. If we do not succeed in attracting new personnel or retaining
and
motivating our current personnel, our business could be harmed. In making
employment
decisions, particularly in the Internet and high-technology industries, job
candidates
and even our current personnel often consider the value of stock options they
may receive
in connection with their employment. As a result of recent volatility in our
stock
price,
we may be disadvantaged in competing with companies that have not
experienced similar
volatility or that have not yet sold their stock publicly.
POTENTIAL ACQUISITIONS INVOLVE RISKS WE MAY NOT ADEQUATELY ADDRESS
As part of our business strategy, we have acquired technologies and businesses
in the past, and intend to continue to do so in the future. The failure to
adequately
address the financial, legal and operational risks raised by acquisitions of
technology
and businesses could harm our business. Acquisition or business combination
transactions
are accompanied by a number of significant risks. Financial risks related to
acquisitions
may harm our financial position, reported operating results or stock price,
and
include:
* Potentially dilutive issuances of equity securities;
* Use of cash resources;
* The incurrence of additional debt and contingent liabilities;
* Large write-offs and difficulties in assessment of the relative percentages of
in-process
research and development expense that can be immediately written off as
compared to the
amount which must be amortized over the appropriate life of the asset; and
* Amortization expenses related to goodwill and other intangible assets.
Acquisitions also involve operational risks that could harm our existing
operations or
prevent realization of anticipated benefits from an acquisition.
These operational risks include:
* Difficulties in assimilating the operations, products, technology,
information
systems
and personnel of the acquired company;
* Diversion of management's attention from other business concerns and the
potential
disruption of our ongoing business;
* The difficulty of incorporating acquired technology or content and rights
into our
products
and services and unanticipated expenses related to such integrations;
* Impairment of relationships with our employees, affiliates, advertisers and
content
providers;
* The assumption of known and unknown liabilities of the acquired company;
* Entrance into markets in which we have no direct prior experience; and
* Loss of key employees of the acquired company.
THE GROWTH OF OUR BUSINESS DEPENDS ON THE INCREASED USE OF THE
INTERNET FOR COMMUNICATIONS, ELECTRONIC COMMERCE AND ADVERTISING
The growth of our business depends on the continued growth of the Internet as a
medium for communications, electronic commerce and advertising. Our
business will be harmed
if Internet usage does not continue to grow, particularly as a source of media
information
and entertainment and as a vehicle for commerce in goods and services. Our
success also
depends on the efforts of third parties to develop the infrastructure and
complementary
products and services necessary to maintain and expand the Internet as a
viable commercial
medium. We believe that other Internet-related issues, such as security,
privacy,
reliability, cost, speed, ease of use and access, quality of service and
necessary
increases in bandwidth availability, remain largely unresolved and may affect
the amount
and type of business that is conducted over the Internet, and impact our
ability
to sell
our products and services and ultimately impact our business results. If
Internet usage
grows, the Internet infrastructure may not be able to support the demands
placed on it
by such growth, specifically the demands of delivering high-quality media
content. As a
result, its performance and reliability may decline
OUR DIRECTORS AND EXECUTIVE OFFICERS BENEFICIALLY OWN A LARGE PERCENTAGE OF OUR
STOCK; THEIR INTERESTS COULD CONFLICT WITH YOURS; SIGNIFICANT SALES OF
STOCK HELD BY THEM COULD HAVE A NEGATIVE EFFECT ON OUR STOCK PRICE;
SHAREHOLDERS MAYBE
UNABLE TO EXERCISE CONTROL
Our executive officers, directors and affiliated persons will have significant
influence to:
* Elect or defeat the election of our directors;
* Amend or prevent amendment of our articles of incorporation or bylaws;
* Effect or prevent a merger, sale of assets or other corporate transaction; and
* Control the outcome of any other matter submitted to the shareholders
for vote.
Management's stock ownership may discourage a potential acquirer from making
a tender offer or otherwise attempting to obtain control of Streamedia, which in
turn
could reduce our stock price or prevent our shareholders from realizing a
premium over
our stock price.
OUR STOCK PRICE HAS BEEN AND MAY CONTINUE TO BE VOLATILE
The trading price of our common stock has been and is likely to continue to be
highly
volatile. Our stock price could be subject to wide fluctuations in response to
factors
such as:
* Actual or anticipated variations in quarterly operating results;
* Announcements of technological innovations, new products or services by
us or our
competitors;
* Changes in financial estimates or recommendations by securities analysts;
* The addition or loss of strategic relationships or relationships with our key
customers;
* Conditions or trends in the Internet, streaming media, media delivery and
online
commerce markets;
* Changes in the market valuations of other Internet, online service or
software
companies;
* Announcements by us or our competitors of significant acquisitions, strategic
partnerships, joint ventures or capital commitments;
* Legal, regulatory or political developments;
* Additions or departures of key personnel;
* Sales of our common stock; and
You should note that an investment in our common stock involves certain risks
and
uncertainties that could affect our future business success or financial
results.
Our
actual results could differ materially from those anticipated in these
forward-looking
statements as a result of certain factors, including those set forth in
"Factors
That
May Affect Our Business, Future Operating Results and Financial Condition"
and elsewhere
in this Quarterly Report on Form 10-Q.
We believe that it is important to communicate our expectations to our
investors.
However, there may be events in the future that we are not able to predict
accurately or
over which we have no control. Before you invest in our common stock, you
should be
aware that the occurrence of the events described in the "Factors That May
Affect
Our
Business, Future Operating Results and Financial Condition" and elsewhere
in this
Quarterly Report on Form 10-Q could materially and adversely affect our
business,
financial condition and operating results. We undertake no obligation to
publicly
update any forward-looking statements for any reason, even if new information
becomes
available or other events occur in the future.
OTHER INFORMATION
LEGAL PROCEEDINGS
From time to time, we have been threatened with or named as a defendant in
lawsuits.
From time to time we receive communications from third parties asserting
breach of
agreements and other claims. Our Company currently has been named in two
such events
that are required to be disclosed under the securities laws. There can be no
assurance
that litigation will not be commenced regarding these or other matters. The two
legal
events are as follows:
Dynax Solutions, Inc., has filed suit against our Company, alleging that we
breached
a service contract and owe Dynax approximately $56,000. We have filed
an answer,
generally denying the allegations made by Dynax, and has filed a counterclaim,
alleging damages against Dynax in excess of $150,000. Our Company believes
that the
suit, as alleged in the complaint that Dynax filed, is without merit and our
Company
intends to defend the action vigorously.
Vignette Corporation ("Vignette") has filed suit against our Company, alleging
that we
entered
into an agreement for Vignette to provide certain products and services to the
Company.
Vignette alleges that we refused to pay approximately $114,000 that Vignette
claims is
owed to it. Our Company, without admitting any liability regarding the claim
by
Vignette,
currently is attempting to settle the matter.
On March 20, 2001, we received notice from the NASDAQ Listings Qualifications
Panel that
its common stock would no longer be listed on the NASDAQ SmallCap Market
effective
with the close of business on March 28, 2001. The panel's action was based
on our
inability to maintain a minimum bid price of $1.00 over the previous 30
consecutive
trading days.
On May 4, 2001, we announced that we had been notified that, besides its bid
price
deficiency, we currently do not currently comply with the net tangible
assets/market
capitalization/income requirement as set forth in NASDAQ Marketplace Rule
4310(c)(2)(B).
We had a hearing before the NASDAQ listing and qualification staff on May
10, 2001.
Our Company was not delisted at that hearing. The Listing Qualification
Panel will
continue to review our listing qualifications.
We are not involved in any other legal matters that our Company believes
would, if
adversely determined, have a material adverse effect upon its business or
results
of operations. There can be no assurance whether these matters will be
determined
in a manner that is favorable to our Company or, if adversely determined,
whether
such determination would have a material adverse effect upon our business,
financial
condition or results of operations.
CHANGES IN SECURITIES AND USE OF PROCEEDS
RECENT SALES OF UNREGISTERED SECURITIES
NOTES PAYABLE
On March 2, 2001 and February 21, 2001, we issued promissory notes aggregating
approximately $50,000 and $97,879, respectively, bearing interest at the rate
of
10%
per annum from the date of the promissory note or before the sooner of (i)
ninety days
after the date of the promissory note or (ii) forty-five days after written
demand
is
made by the holder of the note. These promissory notes are collateralized by
913,600
shares of our Company's unregistered, restricted common stock. The
proceeds were used
for working capital purposes.
OTHER INFORMATION
EXHIBITS AND REPORTS ON FORM 8-K
On January 9, 2001, we filed an 8-K reflecting that we acquired eLeaders, Inc.
(www.eleaders.com)("eLeaders"), of Minneola, NY.
eLeaders provides hosting, Internet access (DSL services), and web site design
services.
The filing also noted that Streamedia signed a letter of intent to merge eSynch
Corp.
("eSynch"). eSynch offers media infrastructure delivery tools and services for
the streaming video marketplace. According to terms of the letter of intent,
eSynch
would have become a wholly owned subsidiary of Streamedia. The intent to
this
transaction was subsequently mutually rescinded.
A Form 8-K filed on March 14, 2001 noted that, based on the analysis of the
available
financial information concerning eLeaders, Inc. (eLeaders), the Board of
Directors
determined that the acquisition of eLeaders does not constitute an acquisition
of a
significant amount of assets. Upon further review of the acquisition, we
did not
at
that time decide whether to treat the transaction as a pooling or a purchase.
On March 9, 2001, Streamedia Communications, Inc., held a special meeting
of the board
of directors. At that meeting, by a majority vote, the board agreed to remove
Gayle
Essary from his position as a director and Vice President of Streamedia
Communications,
Inc.
PROXY FILINGS
We filed preliminary proxy materials with the Commission on March 23,
2001, giving
notice regarding a special meeting to solicit approval for a reverse split of
our
common stock. We filed a revision of the preliminary proxy materials on
May 3, 2001.
We amended the proxy statement to add two additional proposals. The first
new proposal
seeks shareholder approval to increase the number of authorized shares o
f our Company
to 50 million shares. The second new proposal seeks shareholder approval
to approve
and adopt the agreement to merge with and into HOA Networks, Inc.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this
report to be signed on its behalf by undersigned, thereunto duly authorized.
Streamedia Communications, Inc.
Date: August 27, 2001 By: /s/ John Velasco-Mills
John Velasco-Mills, President
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F-7
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