U.S. Securities and Exchange Commission
Washington, DC 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, 2003
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ---- to ----
Commission File number 000-49989
New Media, Inc.
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(Exact name of small business issuer as specified in its charter)
Delaware 03-0459613
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(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8914 Legacy Park Dr, Suite J,
Charlotte, North Carolina 28269
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(Address of principal executive office and zip code)
704-547-7090
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(Issuer's telephone number)
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(Former name, former address, and former fiscal year,
if changed since last report)
Check whether the Issuer (1) filed all reports required to be filed by
Section 13 or 15 (d) of the Exchange Act of 1934 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 at least
the past 90 days. Yes X No ___
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date:
On April 4, 2003, there were 40,054,847 shares of the Registrant's
Common Stock issued and outstanding. Common Stock, par value $0.0001.
THESE FINANCIAL STATEMENTS HAVE NOT BEEN REVIEWED BY OUR INDEPENDENT AUDITORS.
NEW MEDIA, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
INDEX TO CONDENSED FINANCIAL STATEMENTS
INDEX
PART I. FINANCIAL INFORMATION
Item 1. CONDENSED FINANCIAL STATEMENTS
PAGE 1 BALANCE SHEET FOR THE PERIOD FROM
JUNE 20, 2002 (INCEPTION) TO DECEMBER 31, 2002
AND MARCH 31, 2003 (unaudited)
PAGE 2 STATEMENT OF OPERATIONS FOR THE PERIOD FFROM
JUNE 20, 2002 (INCEPTION) TO DECEMBER 31, 2002
AND MARCH 31, 2003 (unaudited)
PAGE 3 STATEMENT OF CASH FLOWS FOR THE PERIODFROM
JUNE 20, 2002 (INCEPTION) TO DECEMBER 31, 2002
AND MARCH 31, 2003 (unaudited)
PAGES 4 - 6 NOTES TO FINANCIAL STATEMENTS AS OF MARCH 31, 2003
Item 2. Management's Discussion and Analysis of Financial
Condition or Plan of Operation.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security-Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
THESE FINANCIAL STATEMENTS HAVE NOT BEEN REVIEWED BY OUR INDEPENDENT AUDITORS.
NEW MEDIA INC.
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEET
--------------------------------
For the Period
June 20, 2002 For the Period
(inception) to March 31, 2003
December 31, 2002 (unaudited)
----------------- --------------
ASSETS
CURRENT ASSETS:
Cash $ - $
Accounts Receivables - 43,200
Prepaid Items - 33,274
Equipment - 3,090
----------
TOTAL CURRENT ASSETS - 79,564
----------
Investments - 947,760
TOTAL ASSETS. - $1,027,324
========== ===========
LIABILITIES AND STOCKHOLDER'S EQUITY <DEFICIT>
CURRENT LIABILITIES:
Bank overdraft $ 41 $ 41
Accounts Payable 1,700 2,593
Due to Officer 749 2,120
------- -------
TOTAL CURRENT LIABILITIES $2,540 4,754
_______ _______
STOCKHOLDER'S EQUITY <DEFICIT>:
Preferred Stock,
$.0001 par value,
20,000,000 shares
authorized, none
issued and outstanding - -
Common Stock,
$.0001 par value,
80,000,000 shares
authorized, 35,000,000
issued and outstanding 250 250
Additional paid-in
capital 201 1,098,828
Deficit accumulated
during development stage <2,991> <76,508>
---------- ----------
Total Stockholder's Equity <2,540> 1,022,570
----------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY <DEFICT> $ - $ 1,027,324
========== ==========
The accompanying notes are an integral part of these financial
statements.
THESE FINANCIAL STATEMENTS HAVE NOT BEEN REVIEWED BY OUR INDEPENDENT AUDITORS.
NEW MEDIA INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF OPERATIONS
-----------------------
For the Period
June 20, 2002 For the Period
(inception) to March 31,2003
December 31,2002 (unaudited)
--------------- ---------------
Income $ - $ -
Expenses
Administrative expense 2,991 2,307
Operational expenses 69,198
---------- ----------
Total expenses 2,991 71,505
---------- ----------
NET LOSS $< 2,991> $<71,505>
========== ==========
Basic and diluted loss per
common share $ <.00> $ <.00>
========== ==========
Basic and diluted weighted
average number of common
shares outstanding 2,500,000 40,054,847
========== ==========
The accompanying notes are an integral part of these financial
statements.
THESE FINANCIAL STATEMENTS HAVE NOT BEEN REVIEWED BY OUR INDEPENDENT AUDITORS.
NEW MEDIA INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF CASH FLOWS
------------------------
For the Period
June 20, 2002 For the Period
(inception) to March 31, 2003
December 31, 2002 (unaudited)
----------------- --------------
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net loss $<2,991> $<76,508>
Adjustment to reconcile
net loss to net cash used by
operating activities
Contributed expenses 201
Increase in bank over draft 41
Increase in accounts payable 1,750 4,754
------- -------
Net Cash Used In Operating Activities <999> <71,754>
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES - -
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Officers loans 749 2,120
Proceeds from issuance of common stock 250 1,099,078
-------- ----------
Net Cash Provided By Financing
Activities 999 1,101,198
------- ----------
INCREASE IN CASH AND CASH EQUIVALENTS - 1,029,444
CASH AND CASH EQUIVALENTS - BEGINNING
OF PERIOD - -
------- -------
CASH AND CASH EQUIVALENTS -
END OF PERIOD $ - $1,029,444
========================= ======== ===========
The accompanying notes are an integral part of these financial
statements.
THESE FINANCIAL STATEMENTS HAVE NOT BEEN REVIEWED BY OUR INDEPENDENT AUDITORS.
NEW MEDIA INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
AS OF MARCH 31, 2003
-----------------------
NOTE 1 - BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Organization and Business Operations
NEW MEDIA INC. (a development stage enterprise) "the
Company") was incorporated in Delaware on June 20, 2002 to serve as a
vehicle to effect a merger, exchange of capital stock, asset acquisition
or other business combination with a domestic or foreign private business.
Prior to January 30, 2003, all activity related to the Company's
formation and preparation of the filing of a registration statement with
the Securities and Exchange Commission on Form 10-SB.
On February 1, 2003, the Company entered into an agreement to acquire
New Dynamic Media, Inc. a Florida corporation. The purchase was to be completed
by a share exchange whereby one share of New Media, Inc. would be exchanged
for four shares of New Dynamic Media. New Dynamic Media is engaged in the
Media and Barter exchange business.
On February 2,2003, the Company established Realty Development Corporation
a Delaware corporation, as a wholly owned subsidiary. Realty purpose is to
identify and acquire real estate assets for the corporation. The Company
will identify and hire a real estate consultant to assist with real estate
acquisitions. The Company intends to acquire 38 to 48 facilities to house
daycare centers for a related entity's daycare operations as well as other
private daycare center operators.
On February 3, 2003, the Company established Thorobred Entertainment
a Delaware corporation as a wholly owned subsidiary. Thorobred's purpose is to
serve as a start-up enterprise that focuses on developing entertainment,
music recordings, and live entertainment for people in the 18 - 35 age range.
Thorobred has no assets or revenues. Consultants will be hired to assist in the
development of this company.
On February 19, 2003, the Company obtained the rights to purchase real estate
property located at 144 Bevan Drive, Mooresville, NC 28115 from
a related entity. The company will purchase the property
in accordance with prior arrangements for $860,000.00. The property is
presently being leased to Wee Lads and Lassie Day Care Center.
The Company will continue to lease the property to the Daycare Center
under a non-cancelable 10 year lease.
Future minimum rental payments as of December 31, 2002 in the aggregate and
for each of the five succeeding years and thereafter are as follows:
Year Amount
2003 $104,400
2004 104,400
2005 104,400
2006 104,400
2007 104,400
Thereafter 574,200
$1,096,200
Rent expense for 2002 and 2001 was $100,459 and $96,250, respectively.
The terms of Purchase Agreement were determined through
arms-length negotiations between the Company and the Seller.
On February 24, 2003, the Company terminated its agreement to acquire
New Dynamic Media, Inc.
The yearend of the Company is December 31 for both book and tax
purposes.
The Company's ability to continue operations and implement its
acquisition strategy is contingent upon its ability to secure additional
equity and or debt funding.
B. Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with an
original maturity of three months or less from the date of purchase that
are readily convertible into cash to be cash equivalents.
C. Use of Estimates
The preparation of the financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
D. Income Taxes
The Company accounts for income taxes under the Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS 109").
Under Statement 109, deferred tax assets and liabilities are recognized
for the future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities
and their respective tax basis. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in
the years in which those temporary differences are expected to be
recovered or settled.
Under SFAS 109, the effect on deferred tax assets and liabilities of
a change in tax rates is recognized in income in the period that includes
the enactment date. There were no current or deferred income tax expense
or benefits due to the Company not having any material operations for the
period ended December 31, 2002.
E. Basic and Diluted Net Loss per Share
Net loss per share is calculated in accordance with Statement of Financial
Accounting Standards No. 128, Earnings Per Share ("SFAS 128"). Basic net loss
per share is based upon the weighted average number of common shares
outstanding. Diluted net loss per share is based on the assumption that
all dilutive convertible shares, stock options and warrants were converted
or exercised. Dilution is computed by applying the treasury stock method.
At March 31, 2002 there were no dilutive convertible shares, stock
options or warrants.
F. Comprehension Income
Statement of Financial Standards No. 130 "Reporting Comprehensive Income,"
(SFAS 130) requires that total comprehensive income be reported in the
financial statements. There were no components of comprehensive income;
consequently, no separate statement of comprehensive income has been
presented.
G. Recent Accounting Standards Pronouncements
In the periods reported, the company was subject to the provisions of
Statement of Financial Accounting Standards No. 131 ("SFAS 131").
"Disclosure about Segments of an Enterprise and Related Information." This
statement had no impact on the Company's financial statements as the
Company's financial statements reflect how the "key operating decision
maker" views the business. The Company will continue to review this
statement over time to determine if any additional disclosures are
necessary based on evolving circumstances.
In June 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 141 "Business
Combinations" and No. 142 "Goodwill and Other Intangible Assets". SFAS No.
141 requires all business combinations initiated after June 30, 2001 to be
accounted for under the purchase method. For all business combinations for
which the date of acquisition is after June 30, 2001, SFAS No. 141 also
establishes specific criteria for the recognition of intangible assets
separately from goodwill and requires unallocated negative goodwill to be
written off immediately as an extraordinary gain, rather than deferred and
amortized. SFAS No. 142 changes the accounting for goodwill and other
intangible assets after an acquisition. The most significant changes made
by SFAS No. 142 are:(1) goodwill and intangible assets with indefinite
lives will no longer be amortized; (2) goodwill and intangible assets with
indefinite lives must be tested for impairment at least annually; and (3)
the amortization period for intangible assets with finite lives will no
longer be limited to forty years. At this time, the Company does not
believe that the adoption of either of these statements will have a
material effect on its financial position, results of operations, or cash
flows.
In June 2001, the FASB issued SFAS No. 143 "Accounting for Asset
Retirement Obligations". SFAS No. 143 establishes accounting requirements
for retirement obligations associated with tangible long-lived assets,
including (1) the timing of the liability recognition, (2) initial
measurement of the liability, (3) allocation of asset retirement cost to
expense, (4) subsequent measurement of the liability and (5) financial
statement disclosures. SFAS No. 143 requires that an asset retirement
cost should be capitalized as part of the cost of the related long- lived
asset and subsequently allocated to expense using a systematic and
rational method. The adoption of SFAS No. 143 is not expected to have a
material effect on the Company's financial position, results of
operations, or cash flows. In August 2001, the FASB also approved SFAS No.
144, "Accounting for the Impairment or Disposal of Long-Lived Assets".
SFAS No. 144 replaces SFAS No. 121. The new accounting model for long-
lived assets to be disposed of by sale applies to all long-lived assets,
including discontinued operations, and replaces the provisions of
Accounting Principles Board (APB) Opinion No. 30, "Reporting Results of
Operations - Reporting the Effects of Disposal of a Segment of a
Business", for the disposal of segments of a business. SFAS No. 144
requires that those long-lived assets be measured at the lower of carrying
amount or fair value less cost to sell, whether reported in continuing
operations or in discontinued operations. Therefore, discontinued
operations will no longer be measured at net realizable value or include
amounts for operating losses that have not yet occurred. SFAS No. 144
also broadens the reporting of discontinued operations to include all
components of an entity with operations that can be distinguished from the
rest of the entity and that will be eliminated from the ongoing operations
of the entity in a disposal transaction. The provisions of SFAS No. 144
are effective for financial statements issued for fiscal years beginning
after December 15, 2001 and, generally, are to be applied prospectively.
At this time, the Company does not believe that the adoption of SFAS No.
144 will have a material effect on its financial position, results of
operations, or cash flows.
NOTE 2 - STOCKHOLDER'S EQUITY
A. Preferred Stock
The Company is authorized to issue 20,000,000 shares of preferred stock
at $.0001 par value, with such designations, voting and other rights and
preferences as may be determined from time to time by the Board of
Directors. No shares of preferred stock had been issued as of 31 July 2002.
B. Common Stock
The Company is authorized to issue 80,000,000 shares of common stock at
$.0001 par value. At inception, June 20, 2002, the Company issued
2,500,000 shares of its common stock to Alton Perkins pursuant to Section
4(2) of the Securities Act of 1933. The stock was valued at $.0001 per
share and was purchased by subscription.
On February 10 2003, the Company had a 14 to 1 forward stock split
of its common shares for stockholders of record as of December 31, 2002.
The Perkins Family Trust was assigned 35,000,000 restricted common shares
in accordance with the stock split.
On March 13 2003, the Company filed Form S-8 with the Securities and
Exchange Commission, registering 6,500,000 shares of its common stock
pursuant to the 2003 Non-Qualified Stock Compensation Plan. The purpose
of the Plan is to provide incentive to attract, retain and motivate highly
qualified and competent key employees, consultants, independent contractors,
officers and directors.
On March 21 2003, the Company issued 2,527,540 common shares under its
2003 Non-Qualified Stock Compensation Plan to 41 shareholders.
On April 3 2003, the Company issued 500,000 restricted common shares to
Thorobred Entertainment Inc its wholly owned subsidiary to develop music
entertainment. Additionally, for barter, services, cash and or trade,
the Company issued 2,027,307 restricted common shares to 36 shareholders.
The stock was issued pursuant to an exemption from registration under
Section 4(2) of the Securities Act.
On April 21 2003, in conjunction with its purchase of 1.5 acres of property
located at 144 Bevan Drive, Mooresville, NC 28115 from private owners,
the Company issued 450,000 restricted shares of common stock to Realty
Development Corp a wholly owned sudsidiary of the Company to acquire funding
for real estate. The stock was issued pursuant to an exemption from
registration under Section 4(2) of the Securities Act.
C. Additional Paid-In Capital
Additional paid-in capital at March 31, 2002 represents the fair value of
the amount of organization and professional costs incurred by or on the on
behalf of the Company as well as other funds from the sale or barter
trade of the Company's shares of common stock. Cash or cash equivalents in
the amount of $79,564 were received through barter exchange and the sale
of common shares. Investments of $947,760 were secured in appraised
artwork by the barter and exchange of common stock.(See Note 3)
NOTE 3 - RELATED PARTY TRANSACTIONS
On June 20, 2002, the Company issued a total of 2,500,000 shares of common
stock to Alton Perkins, purchased by a $250 subscription. See NOTE 2.
"STOCKHOLDERS' EQUITY - Common Stock." Mr. Alton Perkins is the sole
officer and director of the Company. Mr. Perkins is deemed to be the
beneficial owner of the 2,500,000 shares of Common Stock of the Company,
these shares having been assigned to the Perkins Family Trust.
On February 10 2003, the Company had a 14 to 1 forward stock split
of its common shares for stockholders of record as of December 31, 2002.
The Perkins Family Trust was assigned 35,000,000 restricted common shares
in accordance with the stock split.
The Company's currently utilizes the offices of Alton Perkins, and is
charged $100.00 per month for rent, beginning on August 1, 2002. For the
period ended March 31, 2003, the company has incurred $2,120 in
expenses, payable to its officer.
NOTE 4 - GOING CONCERN CONSIDERATION
The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles in the United States, which
contemplates the continuation of the Company as a going concern. However,
the Company is in the development stage, and has no current sources of
revenue. Without realization of additional capital, it would be unlikely
for the Company to continue as a going concern.
The management's plans include the acquisition of additional real estate
properties primarily to house daycare centers. To complete its business plan
equity equity and or debt financing is required for the Company to continue
as a going concern. However, there can be no assurance that management will
be successful in this endeavor.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION OR PLAN OF OPERATION
----------------------------------------
Plan of Operation
-----------------
The Registrant is presently a development stage company, chartered
in the state of Delaware on June 20, 2002, whose purpose was to identify
and effect an acquisition or merger with an on going business that
management considered a growth area.
On February 1, 2003, the Company entered into an agreement to acquire
New Dynamic Media, Inc. a Florida corporation. The purchase was to be completed
by a share exchange whereby one share of New Media, Inc. would be exchanged
for four shares of New Dynamic Media. New Dynamic Media is engaged in the
Media and Barter exchange business.
On February 2,2003, the Company established Realty Development Corporation
a Delaware corporation, as a wholly owned subsidiary. Realty purpose is to
identify and acquire real estate assets for the corporation.
On February 3, 2003, the Company established Thorobred Entertainment
a Delaware corporation as a wholly owned subsidiary. Thorobred's purpose is to
serve as a start-up enterprise that focuses on developing entertainment,
music recordings, and live entertainment for people in the 18 - 35 age range.
Thorobred has no assets or revenues. Consultants will be hired to assist in the
development of this company.
On February 19, 2003, the Company obtained the rights to purchase real estate
property located at 144 Bevan Drive, Mooresville, NC 28115 from
a related enity. The company will purchase the property
in accordance with prior arrangements for $860,000.00. The property is
presently being leased to Wee Lads and Lassie Day Care Center.
The Company will continue to lease the property to the DayCare Center
under a non-cancerable 10 year lease.
Future minimum rental payments as of December 31, 2002 in the aggregate and
for each of the five succeeding years and thereafter are as follows:
Year Amount
2003 $104,400
2004 104,400
2005 104,400
2006 104,400
2007 104,400
Thereafter 574,200
$1,096,200
Rent expense for 2002 and 2001 was $100,459 and $96,250, respectively.
The terms of Purchase Agreement were determined through
arms-length negotiations between the Company and the Seller.
On February 24, 2003, the Company terminated its agreement to acquire
New Dynamic Media, Inc.
The Company's stock transfer agent is:
Florida Atlantic Stock Transfer, Inc.
7130 Nob Hill Road
Tamarac, FL, 33321
The Company's CUSIP number is: 64704P 10 9
Change of Business Direction
The Company, with its new subsidiaries, is focusing its business on
developing a real estate, music entertainment, media and barter company.
In the real estate area, we will focus on identifying and acquiring
high-end residential assets, resorts and hotels and day care facilities.
Specifically within the daycare facilties area, within the next 12 to 24
months we intend to acquire 38 to 48 facilities to house daycare centers
for a related entity's daycare operations as well as other private
daycare center operators. We intend to acuire the facilities through
equity and debt financing, and realize income from establishing 10 year
noncancelable leases with daycare center operators.
Music entertainment will focus on identifying and nurturing talent in the
different areas of music. In media we will focus on identifying opportunities
in the medai and barter business.
We will focus on recruiting and retaining high quality
personnel for all three-business areas.
ACQUSITION STRATEGY
Our intent is to locate and acquire through acquisition and or merger
day care facilities owned by private individuals or small businesses
located in growing areas in terms of population, development, and income,
with leases already in place, high end residential real estate properties
that can be acquired at below retail prices, and to identify and acquire
media companies owned by private individuals or small businesses. Music
entertainment will focus on identifying and developing talent that is new
to the retail music market place.
COMPETITION
Competition in the Real Estate Industry
The high-end residential real estate and day care facility industry
is competitive and highly fragmented, with the most important competitive
factors generally based upon location and price. Our competition
consists principally of the following:
o other for-profit, center-based childcare providers who require
facilities;
o users and buyers of high end residential and hotel and residential
properties below retail prices.
Competition in the Media and Barter Industry
The media and barter industry is competitive and highly fragmented,
with the most important competitive factors generally based upon reputation,
access to media, and demand. Our competition consists principally of the
following:
o other national and international companies that focuses on
providing media, local cable, radio, and TV advertisement to
small businesses.
o preschool, kindergarten, and before- and after-school programs
provided by public schools;
Competition in the Music Industry
The music industry is competitive and highly fragmented, with the
most important competitive factors generally based upon artistic quality,
and marketing. Our competition consists principally of the following:
o other national and regional companies that target the 18 - 35
year age group.
o companies such as Def-Jam, High Wire Records, and Brick Records
are competitors within the industry;
EMPLOYEES
As of April 17, 2003, the company had 2 full time and no part-time
employees.
FACILITIES
The property acquired is located at on 1.5 acres at 144 Bevan
Drive, Mooresville, NC, 28115, which is leased from a shareholder of the
Company. The lease, which was negotiated at arms length, expires during
July 2003. Wee Lads and Lassies, Inc. pays a base monthly rent of
approximately $8,700. As the Company implements its acquisition strategy,
it is expected that it will acquire additional facilities around the
United States.
An appraisal of the fair market value on the property was conducted on
31 December 2002 by Hawkins Appraisal, and Auction Company and Real Estate
Appraisals. The property-appraised value was $865,000.
FORWARD-LOOKING STATEMENTS
We have made statements in this report that constitute forward-looking
statements as that term is defined in the federal securities laws. These
forward-looking statements concern our operations, economic performance and
financial condition and include statements regarding: opportunities for
growth;the number of early childhood education and care centers expected to
be added in future years; the profitability of newly opened centers; capital
expenditure levels; the ability to refinance or incur additional indebtedness;
strategic acquisitions, investments, alliances and other transactions; changes
in operating systems and policies and their intended results; our expectations
and goals for increasing center revenue and improving our operational
efficiencies; changes in the regulatory environment; the potential benefit
of tax incentives for child care programs; and our projected cash flow.
The forward-looking statements are subject to various known and unknown risks,
uncertainties and other factors. When we use words such as "believes,"
"expects," "anticipates," "plans," "estimates" or similar expressions we are
making forward-looking statements.
Although we believe that our forward-looking statements are based on
reasonable assumptions, our expected results may not be achieved. Actual
results may differ materially from our expectations. Important factors that
could cause actual results to differ from expectations include, among
others include the following factors.
Item 3. Disclosures about market other risk factors.
RISK FACTORS
Company Related Risks
WE HAVE NO OPERATING HISTORY AND AN ACCUMULATED DEFICIT ON
WHICH TO BASE AN INVESTMENT DECISION IN OUR BUSINESS
We were formed in June 20, 2002. Since then we have raised initial
capital and developed a business plan and recently commenced operations. As
a result, we have little operating history on which to evaluate our proposed
business and our prospects. Our prospects must be considered in light of
the risks, uncertainties, expenses and difficulties frequently encountered
by companies in their early stages of development. We cannot guarantee that
we will be successful in accomplishing our objectives.
WE EXPECT TO CONTINUE TO HAVE BOTH OPERATING AND NET LOSSES FOR THE
FORESEEABLE FUTURE
We incurred losses of $2,991 for the year ended December 31, 2002.
We cannot estimate when revenues from the proposed project will exceed
cumulative losses or whether we will be able to acquire designated property
at all.
WE HAVE RAISED LIMITED CAPITAL AND WILL NEED ADDITIONAL CAPITAL TO IMPLEMENT OUR
BUSINESS PLAN
To date, we have raised limited for working capital by
selling common stock in exchange for barter product and services.
We used and are using these funds to develop our business plan,
identify real estate investment opportunities, and pay expenses to
prepare our required filings with the SEC. We will need to raise
additional funds, both in the form of equity and debt, to acquire properties
to house daycare centers. At present, we expect that we will require
approximately $28,000,000 for such purposes. This amount could change as we
refine and implement our business plan. We believe we can borrow a large
portion of the funds needed to acquire the proposed properties, and plan
to raise the balance through the sale of common stock; however, we do
not have firm commitments for any additional financing.
As a result, we may not be able to raise this capital when needed
or, if we are able to raise additional capital, it may not be on favorable
terms. If this should occur, we would not be able to meet our business
objectives. In addition, if we raise additional funds through the issuance
of common stock, or other equity or debt securities, the securities may
have rights, preferences or privileges senior to those of the rights of
our current shareholders and our shareholders may experience dilution.
RISK OF WAR AND TERRORISM
Terrorist acts or acts of war (wherever located around the world) may
cause damage or disruption to our business and could have an adverse effect
on our operations and financial results. Travel and tourism, of which
our proposed bater and trade business may generate sales is impacted
throughout the United States and the world, have been significantly
affected since the events of September 11, 2001. SOme of our revenue
will be generated, in part, from businesses that rely on travel and tourism.
If this industry is weak, our commercial lease revenue will likely be
adversely affected. Our revenue will also depend on trends in commercial
building, which are impacted by interest rates and general economic trends,
among other things.
OWNERSHIP OF OUR COMMON STOCK IS CONCENTRATED AMONG OUR PRINCIPAL SHAREHOLDERS,
OFFICERS AND DIRECTORS WHO CAN CONTROL ALL SIGNIFICANT CORPORATE TRANSACTIONS
Our directors, executive officers and principal shareholders, and
their affiliates, beneficially own approximately 87% of our outstanding
common stock.As a result, these shareholders can exercise control over
all matters requiring shareholder approval, including the election of
directors and approval of significant corporate transactions. This
concentration of ownership may have the effect of delaying or preventing
a change in control of the Company.
OUR ABILITY TO IMPLEMENT OUR BUSINESS PLAN DEPENDS ON OUR ABILITY TO
ATTRACT AND RETAIN KEY PERSONNEL WHICH WE MAY NOT BE ABLE TO DO
Our future success will depend to a significant extent on the
continued services of our Chief Executive Officer. The loss of this
officer would likely have a significantly detrimental effect on
our business. We do not have employment contracts with this officer and do
not maintain "key man" life insurance policies for any of our officers or
directors.
Our prospects will also depend on our ability to attract and retain highly
qualified sales and marketing, and managerial personnel. Competition for
such personnel is intense, and there can be no assurance that we will
be able to employ or retain such personnel.
WE MAY NOT BE ABLE TO PAY DIVIDENDS TO OUR SHAREHOLDERS FOR THE FORESEEABLE
FUTURE
We have never declared or paid any cash dividends on our common
stock. For the foreseeable future, we intend to retain any earnings to
finance the development and expansion of our business, and we do not
anticipate paying any cash dividends on our common stock. Any future
determination to pay dividends will be at the discretion of the Board
of Directors and will be dependent upon then existing conditions, including
our financial condition and results of operations, capital requirements,
contractual restrictions, business prospects, and other factors that
the Board of Directors consider relevant.
CURRENTLY THERE IS NO ACTIVE TRADING MARKET FOR OUR COMMON STOCK MAKING IT
DIFFICULT FOR SHAREHOLDERS TO SELL OUR COMMON STOCK
As of the date of this report, our common stock is not listed on
the OTC Exchange and there is no active trading market for our common stock.
We seeking to qualify our securities for trading on the OTC. However,
there can be no assurance that we will be successful or that even if so,
a meaningful trading market will develop. Because we lack an active
market for shares of our common stock, the sale prices of our common
stock, if any, could vary widely and shareholders may have difficulty
selling their stock at all.
THE AVAILABILITY OF ADDITIONAL SHARES FOR SALE COULD ADVERSELY AFFECT OUR SHARE
PRICE
We plan on securing public relations companies and affiliates to
assist in developing a market for our stock. These companies and
individuals could sell a sufficient volume of shares of common stock to
lower the share price. These indivduals and companies may hold
"restricted securities," as that term is defined under the Securities Act,
and in the future may be sold pursuant to a registration statement filed
under the Securities Act. Some of these shares may not be sold by these
companies or affiliates, or their transferees, pursuant to Rule 144 of
the Securities Act. This conclusion is based on the position of the staff
of the Division of Corporation Finance of the SEC that any such resale
transaction under Rule 144 would appear to be designed to distribute or
redistribute the shares to the public without coming within the
registration requirements of the Securities Act. Therefore, certain of
these promoters or affiliates, or their transferees, can only resell
their shares through an effective registration statement. Prospective
investors should be aware that there is a risk that such sales would
have a depressive effect on the market price of our securities in any
market which may develop for our securities. If our promoters or
affiliates did not hold these shares, there would not be the same
risk of a depressive effect on the price of the shares you hold.
Real Estate Development Risk Factors
WE DO NOT HAVE THE APPROXIMATELY $28 MILLION NEEDED TO COMPLETE OUR OBJECTIVE
TO ACQUIRE 38 TO 48 FACILTIES TO HOUSE DAYCARE CENTERS
We are considering financing sources, but have not yet secured
financing for the purchase of properties. If we are unable to secure
both acquisition financing, we will be unable to purchase properties,
which may cause us to change our business plan.
PROPERTIES MAY NOT GENERATE SUFFICIENT OPERATING CASH FLOW TO MEET OPERATING
EXPENSES
We plan to generate income from leasing properties to daycare
centers under long term non-cancerable laeses. Revenue will depend
on a number of factors, including changes in economic conditions and
may not be received at regular intervals, which could result in large
swings in our revenue. Debt service payments and property holding costs
are likely to be much more predictable and steady, but could increase
significantly, if there are increases in costs such as real estate taxes,
insurance premiums and utilities or if there are increases in interest
rates. We will have no control over potential increases in these expenses.
If our revenue is insufficient to meet our debt service and property
holding costs, we will need to identify additional sources of funding
or risk defaulting on future financing.
WE COULD ENCOUNTER PROBLEMS AS A RESULT OF USING DEBT TO FINANCE OUR PROPERTIES
We plan to borrow money to pay for the acquisition,and operation of
facilties to house daycare cenetrs and for other general corporate purposes.
By borrowing money, we will expose ourselves to several risks, including the
following:
- the inability to repay the debt when due;
- increases in debt service payments due to variable interest rates
- reduced access to additional debt financing for other purposes; and
- loss of the property that secures any debt upon default of the loan.
WE MAY SUFFER ENVIRONMENTAL LIABILITIES WHICH COULD RESULT IN SUBSTANTIAL COSTS
Under various federal, state, and local laws, ordinances, and
regulations, the owner or operator of real property may be liable for the
costs of removal or remediation of hazardous or toxic substances located
on or in, or emanating from, such property, as well as costs of investigation
and property damages. Such laws often impose such liability without regard
to whether the owner or operator knew of, or was responsible for, the
presence of such hazardous or toxic substances. The presence of such
substances, or the failure to properly remediate such substances, may
adversely affect the owner or operator's ability to sell or lease a
property or borrow using the property as collateral. Other statutes may
require the removal of underground storage tanks. Noncompliance with these
and other environmental, health or safety requirements may result in
substantial costs to us or may result in the need to cease or alter
operations on the property.
RISKS IN DEVELOPING MUSIC INDUSTRY
. the ability to continue to attract and select desirable talent at
manageable costs; the popular demand for particular artists and
albums; the timely completion of albums by major artists;
. the ability to continue to enforce its intellectual property rights
in digital environments; piracy of music by means of Internet
peer-to-peer file sharing and organized and home CD-R activity;
. the ability to develop a successful business model applicable to a
digital online environment;
. the ability to maintain retail product pricing in a competitive
environment;
. the potential loss of catalog if it is determined that recording
artists have a right to recapture sound recordings under the United
States Copyright Act;
. the potential repeal of Subsection (b) of California Labor Code
Section 2855, a Section which prescribes a maximum length for
personal service contracts;
. the risk that there will be other federal and state statutes enacted
which are similar to California Labor Code Section 2855, a Section
which prescribes a maximum length for personal service contracts;
. the overall strength of global music sales.
RISKS IN DEVELOPING BARTER AND TRADE BUSINESS
The Company has only a limited operating history upon which an
evaluation of the Company and its prospects can be based. The Company's
prospects must be evaluated with a view to the risks encountered by a
company in an early stage of development, particularly in light of the
uncertainties relating to the new and evolving distribution methods with
which the Company intends to operate and the acceptance of the Company's
business model. The Company will be incurring costs to develop, introduce
and enhance its barter service bsuiness, to establish marketing relationships,
to acquire and develop products that will compliment each other and to build
an administrative organization. To the extent that such expenses are not
subsequently followed by commensurate revenues, the Company's business,
results of operations and financial condition will be materially adversely
affected. There can be no assurance that the Company will be able to generate
sufficient revenues from the sale of their products.
We caution you that these risks may not be exhaustive. We operate in a
continually changing business environment and new risks emerge from time to
time.
You should not rely upon forward-looking statements except as
statements of our present intentions and of our present expectations that
may or may not occur. You should read these cautionary statements as being
applicable to all forward-looking statements wherever they appear. We
assume no obligation to update or revise the forward-looking statements
or to update the reasons why actual results could differ from those
projected in the forward-looking statements.
Item 4. Control and Procedures
----------------------
(a) Evaluation of Disclosure Controls and Procedures.
-------------------------------------------------
Within the 90 days prior to the date of this report,
NEW MEDIA, INC.("the Company") carried out an evaluation, under the
supervision and with the participation of the Company's management,
including the Company's President and CEO, of the effectiveness of
the design and operation of the Company's disclosure controls and
procedures pursuant to Exchange Act Rule 13a-14. Based upon that
evaluation, the President and CEO concluded that the Company's disclosure
controls and procedures are effective in timely alerting the Company to
material information required to be included in the Company's periodic
SEC filings relating to the Company (including its consolidated
subsidiaries).
(b) Changes in Internal Controls
----------------------------
There were no significant changes in the Company's internal controls
or in other factors that could significantly affect these internal
controls subsequent to the date of our most recent evaluation.
PART II
-------
Item 1. LEGAL PROCEEDINGS
-----------------
We do not believe that there are any pending or threatened legal
proceedings that, if adversely determined, would have a material adverse
effect on our business or operations. However, we may be subject to claims
and litigation arising in the ordinary course of business. Although we
cannot be assured of the ultimate outcome of allegations, claims or
lawsuits, we believe that none of these allegations, claims or lawsuits,
will have a material adverse effect on our financial position, operating
results or cash flows. In addition, we cannot predict the negative impact
of publicity that may be associated with any such allegation, claim or
lawsuit.
Item 2. CHANGE IN SECURITIES
--------------------
At inception, June 20, 2002, the Company issued 2,500,000 shares
of its common stock to Alton Perkins pursuant to Section 4(2) of the
Securities Act of 1933. The stock was valued at $.0001 per share and
was purchased by subscription.
On February 10 2003, the Company had a 14 to 1 forward stock split
of its common shares for stockholders of record as of December 31, 2002.
The Perkins Family Trust was assigned 35,000,000 restricted common shares
in accordance with the stock split.
On March 13 2003, the Company filed Form S-8 with the Securities and
Exchange Commission, registering 6,500,000 shares of its common stock
pursuant to the 2003 Non-Qualified Stock Compensation Plan. The purpose
of the Plan is to provide incentive to attract, retain and motivate highly
qualified and competent key employees, consultants, independent contractors,
officers and directors.
On March 21 2003, the Company issued 2,527,540 common shares
under its 2003 Non-Qualified Stock Compensation Plan to 41 shareholders.
On April 3 2003, the Company issued 500,000 restricted common shares to
Thorobred Entertainment Inc its wholly owned subsidiary to develop music
entertainment. Additionally, for barter, services, cash and or trade,
the Company issued 2,027,307 restricted common shares to 36 shareholders.
The stock was issued pursuant to an exemption from registration under
Section 4(2) of the Securities Act.
On April 21 2003, in conjunction with its purchase of 1.5 acres of property
located at 144 Bevan Drive, Mooresville, NC 28115 from private owners,
the Company issued 450,000 restricted shares of common stock to Realty
Development Corp a wholly owned sudsidary of the Comapny to acquire funding
for real estate. The stock was issued pursuant to an exemption from
registration under Section 4(2) of the Securities Act.
Item 3. DEFAULTS UPON SENIOR SECURITIES
-------------------------------
Not Applicable
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
Not Applicable
Item 5. OTHER INFORMATION
-----------------
Not Applicable
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) There are no exhibits required to be filed for the
period covered by this Report.
(b) Registration 8, 2003 Non-Qualified Stock Compensation
Plan filed March 31, 2003.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
NEW MEDIA, INC.
Dated: May 27, 2003 By:/S/Alton Perkins
-------------------------
Alton Perkins, President
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350
In connection with the accompanying quarterly Report on Form 10-QSB of
Blackstocks Development Corporation for the period ended March 31, 2003,
Alton Perkins, hereby certify pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
to the best of my knowledge and belief, that:
1. Such quarterly Report on Form 10-QSB for the period ended
March 31, 2003, fully complies with the requirements of
section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in such quarterly Report on Form 10-QSB
for the period ended March 31, 2003, fairly presents, in all
material respects, the financial condition and results of
operations of NEW MEDIA, INC.
NEW MEDIA, INC.
Dated: May 27, 2003 By:/s/Alton Perkins
----------------------
Alton Perkins, President
CERTIFICATIONS
--------------
I, Alton Perkins, President of NEW MEDIA, INC., hereby
certify that:
3. I have reviewed this quarterly report on Form 10-QSB of
NEW MEDIA, INC.;
4. Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not
misleading with respect to the period covered by this quarterly
report;
5. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly
present in all material respects the financial condition, results
of operations and cash flows of the registrant as of, and for,
the periods presented in this quarterly report;
6. I am responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-14
and 15d-14) for the registrant and I have:
(g) designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to me
by others within those entities, particularly during the
period in which this quarterly report is being prepared;
(h) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the "Evaluation
Date"); and
(i) presented in this quarterly report my conclusions about the
effectiveness of the disclosure controls and procedures based
on my evaluation as of the Evaluation Date;
5. I have disclosed, based on my most recent evaluation, to the
registrant's auditors and to the audit committee of registrant's
board of directors (or persons performing the equivalent function):
(a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
6. I have indicated in this quarterly report whether or not there
were significant changes in internal controls or in other factors
that could significantly affect internal controls subsequent to
the date of my most recent evaluation, including any corrective
actions with regard to significant deficiencies and material
weaknesses.
Date: May 27, 2003 /s/Alton Perkins
-----------------------
Alton Perkins, President
Chief Executive Officer
Chief Financial Officer