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 December 31, 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
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PEOPLESWAY.COM, INC.
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(Exact name of small business issuer as specified in its charter)
Nevada 87-0374559
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(State or other jurisdiction of (IRS Employeridentification No.)
incorporation or organization)
2969 Interstate Street, Charlotte, North Carolina 28208
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(Address of principal executive offices)
(704) 393-7591
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(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 December 31, 2003:
15,134,306.
Number of shares of preferred stock outstanding as of December 31, 2003: None
INDEX TO FORM 10-QSB
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Page No.
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PART I
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Item 1. Financial Statements (Unaudited)
Balance Sheet -December 31, 2003 3
Statements of Operations - Three and Nine months
Ended December 31, 2003 and 2002 4
Statements of Cash Flows - Nine months
Ended December 31, 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
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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 SHEET
AS OF DECEMBER 31, 2003
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(Unaudited)
ASSETS December 31, 2003
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CURRENT ASSETS:
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Cash and cash equivalents $ 3,835
Prepaid expenses 103,780
TOTAL CURRENT ASSETS 107,615
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FIXED ASSETS:
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Furniture and office equipment 16,321
Accumulated depreciation (12,101)
NET FIXED ASSETS 4,220
TOTAL ASSETS $ 111,835
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LIABILITIES AND STOCKHOLDERS' DEFICIT
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CURRENT LIABILITIES:
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Accounts payable and accrued expenses $ 117,897
Excess of outstanding checks over bank balance 4,278
Deferred revenue - prepaid certificate 197,102
Current portion of notes payable 135,000
Due to Related Parties 10,040
TOTAL CURRENT LIABILITIES 464,317
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LONG TERM LIABILITIES:
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Notes payable 12,408
TOTAL LONG TERM LIABILITIES 12,408
TOTAL LIABILITIES 476,725
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STOCKHOLDERS' DEFICIT:
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Common stock ($.001 par value, 100,000,000
shares authorized; 15,134,306 and 15,033,696
issued and outstanding at December 31, 2003
and March 31, 2003, respectively) 15,134
Additional paid-in-capital 449,577
Retained deficit (829,601)
TOTAL STOCKHOLDERS' DEFICIT (364,890)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 111,835
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PEOPLESWAY.COM, INC.
STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2003 AND 2002
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Three Months Ended Nine Months Ended
December 31, December 31,
2003 2002 2003 2002
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REVENUES AND RELATED COSTS:
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Retail sales $ 350,118 $ 281,617 $ 829,168 $1,070,185
Less: Distributor allowance
on product purchases (110,469) (52,924) (220,629) (157,449)
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239,649 228,693 608,539 912,736
Other revenue 0 371 0 14,431
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NET REVENUES 239,649 229,064 608,539 927,167
COST OF RETAIL SALES (108,679) (112,072) (290,229) (434,631)
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GROSS PROFIT 130,970 116,992 318,310 492,536
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EXPENSES:
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Selling, general and
administrative 104,237 112,515 311,463 491,796
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TOTAL EXPENSES 104,237 112,515 311,463 491,796
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OPERATING INCOME (LOSS) 26,733 4,477 6,547 740
OTHER EXPENSES:
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Interest Expense (2,807) (7,534) (8,222) (12,310)
Writedown of receivable (27,343) (343,677) (23,418) (343,677)
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TOTAL OTHER EXPENSES (30,150) (351,211) (31,640) (355,987)
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NET INCOME (LOSS) $ (3,417) $ (346,734) $ (24,793) $ (355,247)
========== ========== ========== ==========
Net income (loss) per
share - basic and
fully diluted $ .00 $ (.02) $ .00 $ (.03)
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Weighted average shares
outstanding 15,087,305 14,862,012 15,087,305 14,181,316
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PEOPLESWAY.COM, INC.
STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED DECEMBER 31, 2003 AND 2002
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2003 2002
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CASH FLOWS FROM OPERATING ACTIVITIES:
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Net loss $ (24,793) $ (355,247)
Adjustments to reconcile net income (loss)
to net cash provided by Operating activities:
Depreciation 2,448 2,448
Common stock issued for services 21,840 145,082
Reserve for uncollectible debt 0 343,677
(Increase) decrease in prepaid expenses 379 417
(Increase) in inventory 0 (607)
(Increase) Other Assets 0 (207,620)
Increase (Decrease) in accounts payable
and accrued expenses 4,800 88,488
(Decrease) in excess of outstanding checks
over bank balances (3,806) 0
Increase (decrease) in deferred revenue
- prepaid certificate (2,981) (2,343)
(Increase) in due from related parties 0 (4,148)
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NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES (2,113) 10,147
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CASH FLOWS FROM FINANCING ACTIVITIES:
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Proceeds from notes payable 15,097 35,936
(Payment of) notes payable (2,659) (18,624)
Proceeds from (payments to) related parties (6,500) (28,430)
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NET CASH (USED IN) FINANCING ACTIVITIES 5,908 (10,758)
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NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 3,795 (611)
CASH AND CASH EQUIVALENTS:
BEGINNING OF THE PERIOD 40 2,542
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END OF PERIOD $ 3,835 $ 1,931
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SUPPLEMENTARY CASH FLOW INFORMATION OF
NON-CASH FINANCING:
Common stock issued for services $ 21,840 $ 145,082
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The accompanying notes are an integral part of these financial statements
NOTES TO FINANCIAL STATEMENTS
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PEOPLESWAY.COM, INC.
DECEMBER 31, 2003 (UNAUDITED)
ITEM 1.
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NOTE 1 - BASIS OF PRESENTATION
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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 December 31,
2003 (unaudited), the results of operations for the three and nine months ended
December 31, 2003 and 2002, and cash flows for the nine months ended December
31, 2003 and 2002. The results for the nine months ended December 31, 2003, are
not necessarily indicative of the results to be expected for the entire fiscal
year ending March 31, 2004.
NOTE 2 - GOING CONCERN
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The Company has suffered recurring losses and has an accumulated deficit of
$829,601 at December 31, 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 and adding additional distribution channels. These
financial statements do not include any adjustments that might result from this
uncertainty.
NOTE 3 - WRITE-DOWN OF RELATED PARTY RECEIVABLE
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During the three months ended December 31, 2002, the Company provided an
allowance of $343,677 for an uncollectable related party receivable from DRM,
Inc., a company controlled by our Chairman. We have received notice that DRM,
Inc. intends to fully repay the receivable. However, it has current liquidity
problems and insufficient collateral to secure the receivable. As such, we are
reserving the entire balance to bad debt.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
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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
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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., a related party, 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
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For the Three and Nine months Ended December 31, 2003 and 2002.
Retail Sales and Net Revenues
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Net revenues for the three and nine months ended December 31, 2003 were
$239,649 on $350,118 in retail sales and $608,539 on $829,168 in retail sales
versus net revenues of $229,064 on $281,617 in retail sales and $927,167 on
$1,070,185 in retail sales, respectively, for the comparable period in 2002, an
increase of 5% and a decrease of 34%, respectively in net revenues. The decrease
for the nine months in net revenues was primarily attributable to the Company's
loss of a key member of our direct sales leadership team (which has historically
contributed approximately 40% to 50% of our sales), due to illness and the focus
on three core products. Management began implementing a new sales strategy in
October 2003 and added a new key member to the sales leadership team. The 5%
increase net revenues for the three month period were a result of these
decisions. Net revenues consisted of product sales, monthly service fees and
business aid sales.
Cost of Sales
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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 and nine months ended December 31, 2003 were
$108,679 and $290,229 versus $112,072 and $434,631 respectively for the
comparable period in 2002, a decrease of 3% and 33% respectively. The change was
due to the correlation between net revenues to cost of sales. Gross profit
margins for the three and nine months ended December 31, 2003 were approximately
55% and 52% versus 51% and 53% respectively.
Expenses
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Selling, general and administrative expenses for the three and nine months
ended December 31, 2003 were, $104,237 and $311,463 versus $112,515 and $491,796
respectively for the comparable period in 2002, a decrease of 7% and 37%. These
expenses were lower due a decrease in legal, consulting and related expenses.
Impact of Inflation
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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
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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
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For the Nine months Ended December 31, 2003 and 2002.
Cash flows used in operations were $2,113 for the nine months ended
December 31, 2003 versus cash flows provided by operations were $10,147 for the
same period in 2002. This was primarily due to a reduction in the use of stock
for services and a reduction of cash to related parties as well as a reduction
in accounts payable. The Company took a one-time write down of related party
receivables of $343,677 in the period ended December 31, 2002.
Cash flows generated from (used in) financing activities were $21,840 for
the nine months ended December 31, 2003 versus ($145,082) in the same period in
2002. The cash flows during the nine months ended December 31, 2003 and 2002
reflected $3,795 and ($10,755) cash flows from (used in) financing activities,
respectively. This was primarily due a reduction in payments to related parties.
We have funded our cash needs from inception through December 31, 2003 with
a series of related party debt, and equity transactions.
We will substantially rely on the existence of revenue from product sales
over the next 12 months. If the projected revenues fall short of needed capital,
the Company will then need to obtain additional capital through equity or debt
financing to sustain operations for an additional year.
On a long-term basis, liquidity is dependent on continuation and expansion
of operations, receipt of revenues, additional infusions of capital and debt
financing. 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
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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
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(a) As of December 31, 2003, senior management 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
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Item 1. Legal Proceedings
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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
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For the quarter ended December 31, 2002, certain consultants were issued
58,210 shares of common stock, in exchange for services rendered. These
transactions were valued at our closing stock prices on the dates of issuance of
$.10 or $5,821.00.
Item 3. Defaults upon Senior Securities
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None.
Item 4. Submission of Matters to a Vote of Security Holders
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None.
Item 5. Other Information
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Consulting agreements with Prosperitus Capital Corp. and Jean-Francios
Amyot were cancelled, as allowed under the terms of the agreements for
non-performance.
Item 6. Exhibits and Reports on Form 8-K
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Exhibit 99 Certification of Management
(a) Exhibits
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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
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NONE
SIGNATURES
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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: March 10, 2004 /S/ Eugene Johnston
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Eugene Johnston
Chief Executive Officer