U.S. Securities and Exchange Commission
Washington, D.C. 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 June 30, 2003
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 for the transition period from _______ to _______
COMMISSION FILE NUMBER: 000-28657
---------------------------------
PEOPLESWAY.COM, INC.
--------------------
(Exact name of small business issuer as specified in its charter)
Nevada 87-0374559
------ ----------
(State or other jurisdiction of (IRS Employer
incorporation or organization) identification No.)
2969 Interstate Street, Charlotte, North Carolina 28208
-------------------------------------------------------
(Address of principal executive offices)
(704) 393-7591
--------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 [ ]
Number of shares of common stock outstanding as of June 30, 2003: 15,096,076.
Number of shares of preferred stock outstanding as of June 30, 2003: None
INDEX TO FORM 10-QSB
--------------------
Page No.
--------
PART I
- ------
Item 1. Financial Statements
Balance Sheet -June 30, 2003 3
Statements of Operations - Three Months
Ended June 30, 2003 and 2002 4
Statements of Cash Flows - Three Months
Ended June 30, 2003 and 2002 5
Notes to Financial Statements 6-7
Item 2. Management's Discussion and Analysis of
Financial Condition And Results of Operations 7-9
Item 3. Quantitative and Qualitative Disclosures
About Market Risk 9
Item 4. Controls and Procedures 9
PART II
- -------
Item 1. Legal Proceedings 10
Item 2. Changes in Securities 10
Item 3. Defaults 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
PEOPLESWAY.COM, INC.
BALANCE SHEETS
AS OF JUNE 30, 2003
===============================================================================
(Unaudited)
ASSETS June 30, 2003
------ -------------
CURRENT ASSETS:
- ---------------
Cash and cash equivalents $ 40
Prepaid expenses 105,279
-------------
TOTAL CURRENT ASSETS 105,319
-------------
FIXED ASSETS:
- -------------
Furniture and office equipment 16,321
Accumulated depreciation (10,469)
-------------
NET FIXED ASSETS 5,852
-------------
TOTAL ASSETS $ 111,171
=============
LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
CURRENT LIABILITIES:
- --------------------
Accounts payable and accrued expenses $ 104,393
Excess of outstanding checks over bank balance 9,036
Deferred revenue - prepaid certificate 198,937
Due to related parties 1,600
Current portion of notes payable 135,000
Stockholder loan payable 8,440
-------------
TOTAL CURRENT LIABILITIES 457,406
-------------
LONG TERM LIABILITIES:
- ----------------------
Notes payable 15,097
-------------
TOTAL LIABILITIES 472,503
-------------
STOCKHOLDERS' DEFICIT:
- ----------------------
Common stock ($.001 par value, 100,000,000 shares authorized;
15,076,096 and 15,033,696 issued and outstanding at June 30,
2003 and March 31, 2003, respectively) 15,076
Additional paid-in-capital 433,732
Retained deficit (810,140)
-------------
TOTAL STOCKHOLDERS' DEFICIT (361,332)
-------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 111,171
=============
The accompanying notes are an integral part of these financial statements.
PEOPLESWAY.COM, INC.
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2003 AND 2002
===============================================================================
2003 2002
---------- ----------
REVENUES AND RELATED COSTS:
- ---------------------------
Retail sales $ 269,495 $ 456,131
Less: Distributor allowances on
product purchases (68,915) (92,562)
---------- ----------
200,580 363,569
Other revenue 358 7,500
---------- ----------
NET REVENUES 200,938 371,069
COST OF RETAIL SALES (98,068) (162,437)
---------- ----------
GROSS PROFIT 102,870 208,632
---------- ----------
EXPENSES:
- ---------
Selling, general and administrative 105,551 237,306
---------- ----------
TOTAL EXPENSES 105,551 237,306
---------- ----------
OPERATING INCOME (LOSS) (2,681) (28,674)
---------- ----------
OTHER EXPENSES:
- ---------------
Interest expense (2,651) (2,355)
---------- ----------
NET INCOME (LOSS) $ (5,332) $ (31,029)
========== ==========
Net income (loss) per share -
basic and fully diluted $ ** $ **
========== ==========
Weighted average shares 14,760,560 13,584,735
========== ==========
** Less than $.01
The accompanying notes are an integral part of these financial statements
PEOPLESWAY.COM, INC.
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED JUNE 30, 2003 AND 2002
===============================================================================
2003 2002
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
- -------------------------------------
Net income (loss) $ (5,332) $ (31,029)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation 816 816
Common stock issued for services 5,936 115,200
(Increase) decrease in prepaid expenses (1,120) 384
(Increase) Decrease in inventory 0 (607)
Increase in excess of outstanding checks
over bank balance 953 0
Increase (decrease) in accounts payable
and accrued expenses (8,704) 57,457
Increase (decrease) in deferred revenue -
prepaid certificate (1,146) (4,782)
(Increase) in due from related parties 0 (130,234)
---------- ----------
NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIEACTIVITIES (8,597) 7,205
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
- ------------------------------------
Proceeds from notes payable 15,097 10,547
Proceeds from (payments to) related parties 0 (12,368)
(Payment of) stockholder loan (6,500) 0
---------- ----------
NET CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES 8,597 (1,821)
---------- ----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 0 5,384
CASH AND CASH EQUIVALENTS:
BEGINNING OF THE PERIOD 40 2,542
---------- ----------
END OF PERIOD $ 40 $ 7,926
========== ==========
SUPPLEMENTARY CASH FLOW INFORMATION OF NON-CASH FINANCING:
Common stock issued for services $ 5,936 $ 115,200
========== ==========
The accompanying notes are an integral part of these financial statements
NOTES TO FINANCIAL STATEMENTS
-----------------------------
PEOPLESWAY.COM, INC.
June 30, 2003 (UNAUDITED)
ITEM 1.
- --------
NOTE 1 - BASIS OF PRESENTATION
- -------------------------------
The accompanying unaudited financial statements have been prepared in
accordance with accounting principles for interim financial information and
pursuant to the rules and regulations of the Securities and Exchange Commission.
Accordingly, they do not include all of the information and footnotes required
by accounting principles generally accepted in the U.S. for complete financial
statements. These financial statements should be read in conjunction with the
financial statements and notes for the year ended March 31, 2003 appearing in
the Company's annual report on Form 10-KSB as filed with the Securities and
Exchange Commission.
In the opinion of management, the unaudited financial statements contain
all adjustments consisting only of normal recurring accruals considered
necessary to present fairly the Company's financial position at June 30, 2003
(unaudited) and March 31, 2003, the results of operations for the three months
ended June 30, 2003 and 2002, and cash flows for the three months ended June 30,
2003 and 2002. The results for the three months ended June 30, 2003, are not
necessarily indicative of the results to be expected for the entire fiscal year
ending March 31, 2004.
NOTE 2 - GOING CONCERN
- -----------------------
The Company has suffered recurring losses and has an accumulated deficit of
$810,140 at June 30, 2003. These factors raise substantial doubt about the
Company's ability to continue as a going concern. The Company's continued
existence is dependent upon its ability to resolve its business and liquidity
problems, principally through raising additional capital and increasing its
sales. Management's plans with regard to this matter are to seek additional
capital for operations through either debt or equity and increase sales through
creation of new products additional distribution channels. These financial
statements do not include any adjustments that might result from this
uncertainty.
NOTE 3 - EARNINGS (LOSS) PER SHARE
- -----------------------------------
The following represents the calculation of earnings (loss) per share:
Three Three
Months Ended Months Ended
BASIC & FULLY DILUTED June 30, 2003 June 30, 2002
- --------------------- ------------- -------------
Net income (loss) $ (5,332) $ 8,223
Less- preferred stock dividends -0- -0-
------------- -------------
Net income (loss) $ (5,332) $ 8,223
Weighted average number
Of common shares 14,760,560 13,584,735
------------- -------------
Basic& Fully Diluted
Income (loss) per share $ ** $ **
============= =============
** Less than $0.01
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
- --------
With the exception of historical facts stated herein, the matters discussed
in this report are "forward looking" statements that involve risks and
uncertainties that could cause actual results to differ materially from
projected results. Any statements that express, or involve discussions as to,
expectations, beliefs, plans, objectives, assumptions or future events or
performance (often, but not always, through the use of words or phrases such as
"likely will result," "are expected to," "will continue," "is anticipated,"
"estimated," "intends," "plans" and "projection") are not historical facts and
may be forward-looking statements and involve estimates and uncertainties which
could cause actual results to differ materially from those expressed in the
forward-looking statements. Readers of this report are cautioned not to put
undue reliance on "forward looking" statements, which are, by their nature,
uncertain as reliable indicators of future performance. The Company disclaims
any intent or obligation to publicly update these "forward looking" statements,
whether as a result of new information, future events, or otherwise. In addition
the uncertainties include, but are not limited to competitive conditions
involving E-commerce, and the sales of cosmetics, beauty products over the
Internet.
General Description of Business
- -------------------------------
Peoplesway.Com, Inc. ("Peoplesway") is an electronic commerce and Internet
services company that maintains an Internet destination called "Peoplesway,"
located at www.peoplesway.com. The Peoplesway Web site offers goods and services
for sale, including: cosmetics and beauty products, and health supplements which
can be obtained directly through the Web site, or by calling our customer
service team members. The majority of our goods and services are available
through an alliance with DRM, Inc. and its member network of approximately
14,000 independent contractors who may purchase and sell Peoplesway products and
services through the use of our Web site. We do not retain an inventory of any
product we sell. Payment comes directly to Peoplesway from customers through a
secure Internet server that accepts credit card transactions. We then forward
these orders to DRM, who then will drop ship products to customers as orders are
received by Peoplesway.
RESULTS OF OPERATIONS
- ---------------------
For the Three Months Ended June 30, 2003 and 2002.
Retail Sales and Net Revenues
- -----------------------------
Retail sales and net revenues for the three months ended June 30, 2003 were
$269,495 and $200,938 versus $456,131 and $371,069, respectively, for the
comparable period in 2002, a decrease of 40% and 45%, respectively. This
decrease in net revenues was primarily attributable to the Company's loss of a
key Member, due to illness and the focus on three core products. Net revenues
consisted of product sales, monthly service fees and business aid sales. We plan
to accelerate growth of sales in 2004 by increasing expenditures on marketing
and growing public awareness of products and the expansion of the sales
leadership team among Members, as well as, seeking license agreements in
overseas markets.
Expenses
- --------
Selling, general and administrative expenses for the three-month period
ended June 30, 2003 were, $105,551 versus $237,306 for the comparable period in
2002, a decrease of 55%. Expenses were lower due to lower net revenues. Variable
costs declined in proportion to revenues. We anticipate these expenses to
increase, as revenues increase for the remainder of the current fiscal year.
We expect increases in certain expenses such as advertising through fiscal
2004 as the Company moves toward increasing development and marketing of our
products.
Cost of Sales
- -------------
One of the largest factors in the variations in the cost of sales as a
percentage of net revenues is the cost of products.
Cost of sales for the three months ended June 30, 2003 was $98,069 versus
$162,437 for the same period in 2002. The decrease was due to the focus on
increasing in the Company's sales for higher margin products during the period
and the correlation between net revenues to cost of sales. Gross product margins
and product prices remained relatively constant during the year. Management does
anticipate a small increase in cost of sales as percentage of net revenues, due
to the increase of product prices under the expanded agreement with DRM.
Impact of Inflation
- -------------------
We believe that inflation has had a negligible effect on operations during
the year. We believe that we can offset inflationary increases in the cost of
sales by increasing sales and improving operating efficiencies.
Trends, Events, and Uncertainties
- ---------------------------------
Demand for our products will be dependent on, among other things, market
acceptance of the Peopleway.com concept, the quality of our Web site and general
economic conditions, which are cyclical in nature. Inasmuch as a major portion
of our activities is the receipt of revenues from the sales of its products, our
business operations may be adversely affected by our competitors and prolonged
recessionary periods.
Liquidity and Capital Resources
- -------------------------------
For the Three Months Ended June 30, 2003 and 2002.
Cash flows used in operations were $8,597 for the three months ended June
30, 2003 versus cash flows provided by operations of $7,205 for the same period
in 2002. This was primarily due to a reduction in the use of stock for services.
Cash flows generated from (used in) financing activities were $(8,597)for
the three months ended June 30, 2003 versus $7,205 in the same period in 2002.
The cash flows during the three months ended June 30, 2003 and 2002 reflected
$15,097 and $10,547, respectively, in additional notes payable issued by the
Company during the respective quarters.
We have funded our cash needs from inception through June 30, 2003 with a
series of related party debt, and equity transactions.
We will substantially rely on the existence of revenue from product sales
and from the projected revenues of www.Peoplesway.com. We project that we will
need additional capital to fund operations over the next 12 months. If the
projected revenues of www.Peoplesway.com fall short of needed capital, the
Company will not be able to sustain its capital needs for more than six months.
We will then need to obtain additional capital through equity or debt financing
to sustain operations for an additional year. A lack of significant revenues
beginning part of fiscal 2004 will significantly affect the cash position of the
Company and move us toward a position where the raising of additional funds
through equity or debt financing will be necessary.
On a long-term basis, liquidity is dependent on continuation and expansion
of operations, receipt of revenues, additional infusions of capital and debt
financing. We are considering launching a wide scale marketing and advertising
campaign. Our current available capital and revenues are not sufficient to fund
such a campaign. If we choose to launch such a campaign it well require
substantially more capital. If necessary, we plan to raise this capital through
an additional follow-on stock offering. The funds raised from this offering will
be used to develop and execute the marketing and advertising strategy, which may
include the use of television, radio, print and Internet advertising. However,
there can be no assurance that we will be able to obtain additional equity or
debt financing in the future, if at all. If we are unable to raise additional
capital, our growth potential will be adversely affected. Additionally, we will
have to significantly modify our plans.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- --------
We do not have any material risk with respect to changes in foreign
currency exchange rates, commodities prices or interest rates. We do not believe
that we have any other relevant market risk with respect to the categories
intended to be discussed in this item of this report.
ITEM 4. CONTROLS AND PROCEDURES
- --------
(a) On June 30, 2003, our Chief Executive Officer and Chief Financial Officer
made an evaluation of our disclosure controls and procedures. In our
opinion, the disclosure controls and procedures are adequate because the
systems of controls and procedures are designed to assure, among other
items, that 1) recorded transactions are valid; 2) valid transactions are
recorded; and 3) transactions are recorded in the proper period in a timely
manner to produce financial statements which present fairly the financial
condition, results of operations and cash flows for the respective periods
being presented. Moreover, the evaluation did not reveal any significant
deficiencies or material weaknesses in our disclosure controls and
procedures.
(b) There have been no significant changes in our internal controls or in other
factors that could significantly affect these controls since the last
evaluation.
PART II. OTHER INFORMATION
- --------
Item 1. Legal Proceedings
- --------
The Company is not a party to any legal proceedings, nor, to the best of
its knowledge, are any such proceedings threatened or contemplated.
Item 2. Changes in Securities
- --------
In April 2003, certain consultants were issued 42,400 shares of common stock, in
exchange for services rendered. These transactions were valued at our closing
stock prices on the dates of issuance of $.14 or $5,936.
Item 3. Defaults upon Senior Securities
- --------
None.
Item 4. Submission of Matters to a Vote of Security Holders
- --------
None.
Item 5. Other Information
- --------
Consulting agreements with Prosperitus Capital Corp. and Jean-Francios Amyot
were cancelled, as allowed under the terms of the agreements.
Item 6. Exhibits and Reports on Form 8-K
- --------
Exhibit 99 Certification of Management
(a) Exhibits
--------
3 Articles of incorporation, as amended and bylaws are hereby
incorporated by reference into Form 10-SB as amended filed
March 23, 2001.
10.1 Consulting agreement with Prosperitus Capital Corp.
10.2 Consulting agreement with Jean-Francois Amyot
(b) Reports on Form 8-K
-------------------
NONE
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
PEOPLESWAY.COM, INC.
(Registrant)
Date: September 12, 2003 /S/Eugene Johnston
------------------
Eugene Johnston
Chief Executive Officer