U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934
for the Quarterly period ended March 31, 2002
JAMES BARCLAY ALAN INC
(Formerly known as PayForView Media Group Holdings Corp.
and Payforview.com Corp.)
(Exact name of registrant as specified in its charter)
Commission File Number: Nevada, U.S.A. 91-1976310 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) |
18 East 16th Street, Suite 302, New York, New York 10003
(Address of principal executive offices)
(212) 201-6900
(Issuer's telephone number, including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
509 Madison Avenue, 16th Floor, New York, New York, 10022
Securities registered under Section 12(b) of the Act:
NONE
Securities registered under Section 12(g) of the Act:
$0.0001 PAR VALUE COMMON STOCK
(Title of Class)
Check whether the registrant (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 [ ]
Check here if the disclosure of delinquent filers in response to
Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this 10-QSB or any amendment to this Form 10-QSB. [ ]
As of May 14,2002, the aggregate market value of the voting and non-voting common equity held by non-affiliates was $301,263
As of May 14, 2002, the Company had approximately 12,125,255 shares of Common Stock issued and outstanding.
JAMES BARCLAY ALAN INC.
FORM 10-QKSB
TABLE OF CONTENTS AND INFORMATION REQUIRED IN REPORT
Part I. Financial Information
-------
Item 1. Financial Statements (unaudited)
Item 2. Managements Discussion and Analysis 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 Vote of Security
holders
Item 5. Other Information
Item 6. Exhibits and reports on form 8-K
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PART I
ITEM 1. FINANCIAL STATEMENTS (Unaudited)
C O N T E N T S
Page
Condensed Consolidated Balance Sheets F-2
Condensed Consolidated Statements of Operations F-3
Condensed Consolidated Statements of
Cash Flows F-4
Condensed Consolidated Statement of Changes
in Stockholders' Equity F-5
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Notes to Condensed Consolidated
Financial Statements F-6
PART I
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
James Barclay Alan Inc. and Subsidiaries
(formerly PayForView Media Group Holdings Corp.
and Payforview.com Corp.)
(a development stage company)
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, March 31,
2001 * 2002
ASSETS
Cash and cash equivalents $ 1,522 $ 2,789
Prepaid expenses -- 1,674
---------- ---------
Total Current Assets 1,522 4,463
Fixed assets, net 91,225 82,854
Restricted cash 186,772 177,840
Other assets 3,136 11,265
--------- ----------
$ 282,655 $ 276,422
========= ==========
|
* Derived from audited financial statements. The accompanying notes are an integral part of these statements.
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Current liabilities
Accounts payable $ 81,987 $ 183,665
Notes payable to officer -- 17,099
Notes and interest payable -- 92,000
Other liabilities -- 5,094
Liabilities from discontinued
operations 250,000 187,500
------------- ----------
Total Current Liabilities 331,987 485,358
Liabilities to be paid
in common stock -- 127,000
Convertible unsecured debenture -- 15,000
Preferred Stock
Authorized 100,000,000 preferred
shares with a par value of $0.0001
None issued and outstanding
Authorized 1000 Series A mandatory
Redeemable convertible preferred
Shares with a par value of $0.001;
Issued and outstanding, 73 shares -- 73,000
Stockholders' equity (deficiency)
Common stock
Authorized, 250,000,000 common
shares with a par value of $0.0001;
issued and outstanding, 6,587,005
and 11,632,005 shares, respectively 659 1,164
Additional paid-in capital 22,373,287 22,813,205
Destiny valuation account (70,000) (70,000)
Deficit, accumulated during the
development stage (22,353,278) (23,168,305)
----------- ----------
Stockholders' deficiency (49,332) (423,936)
----------- ------------
$ 282,655 276,422
======== ========
|
The accompanying notes are an integral part of these statements.
(format change)
James Barclay Alan Inc. and Subsidiaries
(formerly PayForView Media Group Holdings Corp.
and Payforview.com Corp.)
(a development stage company)
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
Cumulative
Amounts from
April 6,1998
(inception)
Three months ended through
March 31, March 31,
2001 2002 2002
------------ ------------ ------------
Service Revenue (10,500) (10,500)
Costs and expenses
Selling, general and
administrative
Expenses $ 1,024,450 $ 384,474 $11,6662,596
Amortization of licenses 41,427 -- 595,554
Loss on impairment -- -- 5,007,705
Investment expense -- -- 3,010,000
Write-off, investment in subsidiary -- 440,000 440,000
Interest expense -- 7,753 356,384
Interest income (4,962) (7,487) (131,148)
-------- -------- --------
(1,060,915) (814,240) (20,930,591)
-------- -------- --------
Loss from continuing
operations (1,060,915) (814,240) (20,930,591)
----------- ----------- -----------
Discontinued operations
Loss from operations -- -- 1,056,167
Loss from disposal 26,682 -- 1,380,911
------------ ----------- ------------
Loss from discontinued
operations (26,682) -- (2,437,078)
------------ ----------- ------------
Loss before extraordinary
items (1,087,597) (814,240) (23,367,669)
Extraordinary item - gain on
extinguishment of debt
(Note I) -- -- 200,151
----------- ----------- ----------
Net Loss $(1,087,597) (814,240) (23,167,518)
Dividends on preference shares -- 787 787
----------- ----------- ----------
Net Loss applicable to
Common shareholders $(1,087,597) (815,027) (23,168,305)
=========== ========== ===========
Basic and diluted loss per share:
Continuing operations $ (.35) $ (.09) $ (7.45)
Discontinued operations (.01) -- (.87)
Extraordinary item -- -- .08
----------- -------------- ---------
Basic and diluted loss
per share $ (.36) (.09) $(8.24)
========= ======= =======
Weighted-average shares
Outstanding 3,045,367 8,773,172 2,811,885
========= ======== =========
The accompanying notes are an integral part of these statements.
F-4
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James Barclay Alan Inc. and Subsidiaries
(formerly PayForView Media Group Holdings Corp.
and Payforview.com Corp.)
(a development stage company)
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (Deficiency)
(UNAUDITED)
Period from April 6, 1998 (inception) through March 31, 2002
Deficit, Destiny
accumulated Liability
Stock issued Additional during the Valuation
----------------- paid-in development Account
Common Amount capital stage Total
--------------------------------------------------------------------
Balance,
April 6, 1998 $ - $ - $ - $ - $ -
Capital stock of Voyager
International
Entertainment Inc.
issued for services 190,000 19 37,981 - 38,000
Capital stock of Voyager
International
Entertainment Inc.
issued for acquisition
of Voyager Film
Sales Inc. 10,000 1 199 - 200
Capital stock of Voyager
International Entertainment
Inc. issued for cash 16,357 2 112,490 - 112,492
Net loss - - - (275,528) (275,528)
------------------------------------------------------------------------
Balance,
December 31, 1998 216,357 22 150,670 (275,528) (124,836)
Capital stock of
James Barclay Alan Inc.
at January 5, 1999 187,500 18 982 - 1,000
Issuance of shares for
acquisition of
Voyager International
Entertainment Inc. 389,442 39 1,521 - 1,560
Issuance of shares for
acquisition of
Voyager International
Entertainment, Inc. for
potential commission 75,000 8 ( 8) - -
Cancellation of
Voyager shares ( 216,357) ( 22) 22 - -
Issuance of shares for
acquisition of Squadron
One Records and creation
of Street Solid
Records, Inc. 58,675 6 1,598,274 - 1,598,280
Issuance of shares for
acquisition of
licenses and rights 55,125 5 3,067,395 - 3,067,400
Issuance of shares for
services 6,100 1 77,835 - 77,836
Issuance of shares for
consulting services 90,000 9 652,491 - 652,500
Issuance of shares for
consulting services 16,667 2 49,998 - 50,000
Issuance of shares for
financial advisor
services 90,000 9 1,386,867 - 1,386,876
Issuance of shares for
acquisition of Software 10,000 1 291,999 - 292,000
Issuance of shares for
advertising 10,000 1 59,999 - 60,000
Issuance of shares upon
conversion of debt 1,141,850 114 827,386 - 827,500
Allocation of proceeds
of convertible debt to
additional paid-in-capital - - 333,333 - 333,333
Issuance of shares
for cash 27,027 3 99,997 - 100,000
Shares held in escrow
with attorney relating
to debentures 12,500 1 ( 1) - 0
Net loss (9,479,413) (9,479,413)
------------------------------------------------------------------------
Balance
December 31, 1999 2,169,886 $ 217 $8,598,760 $(9,754,941) $(1,155,964)
Issuance of shares for
cash, net of share
issuance costs 180,500 18 5,381,482 - 5,381,500
Issuance of shares for
convertible debt
345,000 35 172,465 - 172,500
Shares issued to
officers and consultants
for services 150,000 15 2,933,985 - 2,934,000
Shares issued for
acquisition of MAS
Acquisition Corporation 16,750 1 30 - 31
Shares issued for
transaction costs for MAS
Acquisition Corporation 16,750 1 375,199 - 375,200
Shares issued for
investment in Turn-Key
Entertainment 100,000 10 999,990 - 1,000,000
Proceeds from sale of
64,000 shares of the
75,000 shares held in
escrow from Voyager
acquisition - - 899,602 - 899,602
Cancellation of remaining
escrow shares ( 11,000) ( 1) 1 - -
Additional compensation
for services performed - - 117,000 - 117,000
Warrants issued for
commitment fees - - 600,000 - 600,000
Stock options issued for
Services - - 82,232 - 82,232
Cancellation of partial
shares related to Bacchus 20,853) ( 2) 2 - 0
Cancellation of shares held
in Escrow relating to
debentures (12,500) ( 1) 1 - 0
Shares issued for Destiny
legal Settlement 50,000 5 135,395 135,400
Liability Valuation
Account for Destiny - - (98,750) (98,750)
Net loss (8,935,391) (8,935,391)
----------------------------------------------------------------------
Balance,
December 31, 2000 2,984,533 298 20,296,144 (18,690,332) (98,750)$1,507,360
Issuance of common stock
equity line of credit 34,500 4 44,846 - - 44,850
Stock held by investment
banker 40,500 4 (4) - - -
Compensation expense for
stock options - - (80,895) - - (80,895)
Warrants Issued for
investment banking
fees - - 21,067 - - 21,067
Proceeds received by Destiny
Music from previously
issued shares - - - 42,068 42,068
Liability valuation
Adjustment for Destiny - - 13,318 (13,318) -
Shares issued for investment
In Turn-Key Entertainment 545,455 55 599,945 - - 600,000
Shares issued to officers
And consultants for
Services
1,820,911 182 1,258,929 - - 1,259,111
Shares issued for cash
From Turn-Key
Entertainment
1,160,000 116 86,884 - - 87,000
Shareholders contribution
Through cancellation
Of outstanding debt - 133,053 133,053
Reverse split odd
Lot adjustment 1,106 - - - - -
Net loss - - - (3,662,946) (3,662,946)
---------- -------- ----------- ----------- ------------------
Balance
December 31, 2001 6,587,005 659 22,373,287 (22,353,278) (70,000) (49,332)
Shares issued for
purchase of Bermondsay
(unaudited) 5,000,000 500 439,500 - - -
Compensation expense
for stock options
(unaudited) - - (5,817) - - -
Share issuance costs for
preferred shares
(unaudited) - - (2,760) - - -
Shares issued to
officer and consultant
for services
(unaudited) 45,000 5 8,995 - - -
Net loss for three months
ended March 31, 2002
(unaudited) - - - (815,027) - -
--------- -------- ---------- ----------- -------- --------
Balance March 31, 2002 11,632,005 $ 1,164 $22,813,205 ($23,168,305)$(70,000)$(423,936)
========== ======== ========== =========== =================
The accompanying notes are an integral part of this statement.
F-5
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James Barclay Alan Inc. and Subsidiaries
(formerly Sierra Gold Corporation,
PayForView Media Group Holdings Corp
and PayForView.com Corp)
(a development stage company)
COMDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three months ended April 6, 1998
March 31 (inception) to
--------------------------- March 31,
2001 2002 2002
------------ ------------ -----------
Cash flows from operating activities
Loss from continuing operations $(1,060,915) $ (814,240) $(20,930,591)
Adjustments to reconcile net loss
to cash used in operating activities
Depreciation 20,504 9,107 181,832
Amortization 41,427 -- 595,554
Amoritization of deferred
offering costs 50,000 -- 275,000
Impairment charges -- -- 760,661
Issuance of common stock
for services and
transaction costs 540,188 3,182 9,727,128
Noncash investment expense -- -- 3,010,000
Liabilities to be settled with common stock -- 127,000 127,000
Noncash write-off of
Investment in subsidiary -- 440,000 440,000
Noncash interest expense -- -- 333,333
Changes in other operating
assets and liabilities
accounts receivable -- (10,500) (9,000)
Prepaid expenses -- (1,674) (53,174)
Interest payable -- 7,000 7,000
Other assets (3,836) ( 8,129) (147,837)
Accounts payable and accrued expenses (39,374) 112,178 144,165
Other liabilities -- 5,095 5,095
---------- ---------- ------------
Net cash used in operating
activities of continuing
operations ( 452,006) (130,981) (5,533,834)
----------- ----------- -----------
Net cash used in operating
activities of discontinued
operations -- -- (657,080)
---------- ---------- -----------
Cash flows from investing
Activities
Payments for website costs -- -- (306,072)
Payment of settlement costs
Relating to sale of
Discontinued Operations -- (62,500) (145,500)
Payment for licenses and rights -- -- ( 84,270)
Proceeds from sale of
Discontinued operations -- -- 250,000
Investment in Turn-Key
Entertainment LLC -- -- (1,400,000)
Proceeds from liquidation
of certificate of deposit -- 8,932 8,932
Acquisition of fixed assets -- (736) (162,087)
---------- ----------- -----------
Net cash provided by investing
activities -- (54,304) (1,838,997)
----------- ---------- ------------
Cash flows from financing activities
Loan from Turn-Key -- -- 57,699
Issuance of common stock 44,850 -- 5,688,696
Issuance of redeemable preferred stock, net -- 70,240 70,240
Proceeds from liquidation
of shares in escrow -- 49,602
Proceeds from loan payable -- -- 1,050,151
Proceeds from convertible
debenture -- 15,000 1,015,000
Notes Payable - officer, net -- 17,099 17,099
Notes payable -- 85,000 85,000
Preferrede dividends payable -- (787) (787)
---------- ---------- -----------
Net cash provided by
financing activities 44,850 186,552 8,032,700
---------- ---------- -----------
Net change in cash and
cash equivalents
during the period (407,156) 1,267 2,789
Cash and cash equivalents,
beginning of period 610,968 1,522 --
--------- ---------- ----------
Cash and cash equivalents,
end of period $ 203,812 $ 2,789 $ 2,789
=========== ========== ==========
Supplemental disclosures of cash
flow information:
Cash paid during the period for
Interest $ -- 7,753 $ 23,051
=========== ========== ==========
Supplemental disclosure of non-cash financing and investing activities
On January 11, 2002, the registrant entered into an agreement to acquire 100% of the
issued and outstanding common stock of Bermondsey Investments Inc., ("Bermondsey") from
the sole shareholder of Bermondsey in exchange for an aggregate of 5,000,000 shares of the
Registrant's restricted common stock valued at $440,000. (see note I)
In February 2002 the Company issued 20,000 shares to directors for annual fees for
services at Board members and 25,000 shares to a consultant for services rendered values
at $4,000 and $5,000 respectively.
The accompanying notes are an integral part of these statements.
F-6
|
(format change)
James Barclay Alan Inc. and Subsidiaries
(formerly PayForView Media Group Holdings Corp.
and Payforview.com Corp.)
(a development stage company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For The Three Months Ended March 31, 2001 and 2002
NOTE A - ORGANIZATION OF THE COMPANY AND
NATURE OF BUSINESS
The Company was incorporated on August 26, 1998 under the name Sierra Gold Corporation. On January 4, 1999, Sierra Gold Corporation changed its name to PayForView.com Corp. and in 2001 changed its name to PayForView Media Group Holdings Corp. In February, 2002, the Company changed its name to James Barclay Alan Inc.
On March 29, 2001 the Board of Directors approved a reverse split of twenty-for one effective with the close of business on April 23, 2001. All of the share amounts have been adjusted to reflect the stock split for all periods presented. On August 15, 2001, the Board of Directors amended the Certificate of Incorporation to increase the common stock authorized to 250,000,000 shares and authorized the issuance of up to 100,000,000 shares of preferred stock, par value $0.0001.
During the fourth quarter of 2001, the Company changed its business focus. On February 12, 2002 the Company acquired Bermondsey Investments Ltd. (now known as James Barclay Alan Ltd.) The Company is considered a development stage Company, as its planned principal operations have not yet commenced. Through December 31, 2001, the Company's previous business was developing an internet-based website to distribute movies, music, live events and sports events direct to consumers on a pay-for-view basis. It was also marketing a rich and streaming media advertising product. The Company is now operating as an investment banking and securities firm that provides financial services to micro-capitalized companies and investors in the NAFTA trading zone (USA, Mexico, Canada and the Caribbean).
NOTE B - BASIS OF PRESENTATION
The accompanying Condensed consolidated financial statements as of March 31, 2002 and for the three months ended March 31, 2001 and 2002 and the cumulative amounts from April 6, 1998 (inception) through March 31, 2002 are unaudited and have been prepared in accordance with accounting principals generally accepted in the United States of America applicable to interim financial information and rules and regulations promulgated by the Securities and Exchange Commission. These financial statements should be read in conjunction with the Company's annual financial statements included in its annual report on Form 10KSB for the year ended December 31, 2001. In the opinion of the Company's management, the March 31, 2001 and 2002 unaudited condensed consolidated interim financial statements include all adjustments, consisting solely of normal recurring adjustments, necessary for a fair presentation of such financial statements. The results of operations for the three months ended March 31, 2002 and 2001 are not necessarily indicative of the results to be expected for any other interim period of the entire year.
In February 2002, the Company approved a private placement for Canadian residents only, to raise up to $1,000,000 via either Class "A" Preference Shares or Convertible Debentures. For the Class "A" Preference Shares, the minimum price per security is $1,000 with a minimum subscription of $7,000. The cumulative dividend is 11% per year paid quarterly starting June 30, 2002 and the holder is eligible to convert starting at $.50 per share on or before June 30, 2002 up to $1.50 per share until June 30 2003. $73,000 has been sold through April 15, 2002. The Debentures are unregistered and convertible into common shares of the Company with interest to accrue at the rate of 8.5% per year paid semi-annually. The Debenture holders have the right to convert one third of the debt into common shares of the Company every six months beginning June 30, 2002 at $0.60, $1.10 and $1.60 per share respectively. The interest payments will be made commencing June 30, 2002 and December 31, 2002. $15,000 has been sold to date.
The Company's future operations are dependent upon the markets acceptance of its new business plan that includes financial, capital raising and consulting services. There can be no assurance that the Company's products and services will be able to secure market acceptance.
We are likely to require substantial funding to continue to market our financial services, capital raising and consulting services. We have raised funds in the past through the sale of securities, and may raise funds in the future through public offerings or private placements of securities, collaborative arrangements or from other sources. The Company can give no assurance that it will be successful in raising additional funds, and the Company's current financial position raises substantial doubt about its ability to continue as a going concern without additional sources of funding. The financial statements do not reflect any adjustment that might result this uncertainty.
The Company will pursue opportunities to finance its operations
and satisfy its cash requirements with a combination of debt
financing, stock sales, and, in the longer term, revenue from
operations. Among the options available to and being considered
by management to ensure the Company has sufficient working
capital for the next twelve months are a) plans to reduce or
delay expenditures, b) plans to increase cash flow through
acquisitions, c) plans to borrow money using the assets and cash
flow potential acquisitions and/or existing equity investees and
d) plans to increase ownership equity through various funding
vehicles including convertible debentures, preferred shares,
private placements and registration of shares for sale to the
public. There can be no assurance that the Company will be
successful in its efforts to raise additional capital needed to
sustain its business through the year ending December 31, 2002.
NOTE C - RECENT ACCOUNTING PRONOUNCEMENTS
In June, 2001, the Financial Accounting Standards Board approved the issuance of SFAS No. 141, "Business Combinations" and SFAS 142, "Goodwill and Other Intangible Assets" which was issued July 20, 2001. The new standards require that all business combinations initiated after June 30, 2001 must be accounted for under the purchase method. In addition, all intangible assets acquired that are obtained through contractual or legal right, or are capable of being separately sold, transferred, licensed, rented or exchanged shall be recognized as an asset apart from goodwill. Goodwill and intangibles with indefinite lives will no longer be subject to amortization, but will be subject to at least an annual assessment for impairment by applying a fair value based test.
The Company amortized intangible assets existing until December 31, 2001. When the Company changed its business strategy, the Company recorded the unamortized balance as an impairment loss because the assets were not fully recoverable.
In August 2001, the FASB issued a statement of Financial Accounting Standard No. 144 "Accounting for the Impairment or Disposal of Long Lived Assets", ("SFAS144"). This statement is effective for the fiscal years beginning after December 15, 2001. This supercedes SFAS 121, while retaining many of the requirements of such statement. The adoption of this standard had no impact on the Company.
NOTE D - RESTICTED CASH
Restricted cash is required pursuant to the Company's main office lease. The restricted cash guarantees a letter of credit totaling $177,840 which was provided to the Company's landlord as a security deposit on its leased premises. The letter of Credit is renewed annually. In April 2002, due to the Company's inability to make timely payments for its leased office space in New York, it was served with legal notice by the Landlord to vacate the premises. On June 6, 2002, the Landlord took legal proposition of the premises, and on June 13, the Company moved to new offices. As a result of the Company's loss of its leased premises, it has forfeited the security deposit to the landlord.
NOTE E - LOSS PER SHARE
The Company computes net loss per share in accordance with Statement of Financial Accounting Standards No. 128 ("SFAS No. 128"), "Earnings Per Share." Under the provisions of SFAS No. 128, basic net loss per share is computed by dividing the net loss for the period by the weighted- average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing the net loss for the period by the weighted-average number of common and common equivalent shares outstanding during the period. However, as the Company generated net losses in all periods presented, common equivalent shares, composed of incremental common shares issuable upon exercise of stock options and warrants are not reflected in diluted net loss per share because such shares are anti-dilutive. An aggregate of 68,750 and 39,531 outstanding stock options and 110,534 and 110,534 outstanding warrants as of March 31, 2002 and 2001 respectively were excluded from the loss per share calculation because the effect would be anti-dilutive. All stock splits have been retroactively reflected in the loss per share calculations for all periods presented. (see Note A)
NOTE F - DISCONTINUED OPERATIONS
We are subject to claims and suits arising in the ordinary course of business. At this time it is not possible to estimate the final outcome of these legal matters or the ultimate loss or gain, except as otherwise stated.
As of March 31, 2002 and 2001 the following liabilities relating to Street Solid, an operation discontinued by the Company as of October 29, 1999, remained on the books of the Company.
On February 5, 2000, Destiny Music ("Destiny") filed a lawsuit against us (Los Angeles Superior Court Case #BC225482), claiming that the Company owed a long-term lease obligation, further financial support on certain projects and/or group promotional efforts and a return of funds allegedly loaned to Street Solid Records, a subsidiary of the Company at the time, which have not been returned as promised.
On November 8, 2000 the Company settled the outstanding lawsuit with Destiny for $325,000 subject to adjustment to $350,000. In November 2000 the company paid $25,000 in cash to Destiny. The remainder was payable either in cash or through the liquidation of shares of the company's common stock. On December 6, 2000, 50,000 shares were issued to Destiny to be liquidated to settle the remaining obligation of $300,000. The Company was required to pay Destiny a monthly minimum of $25,000, which was payable either in cash or through the liquidation of shares. Destiny is restricted under certain securities laws from selling these securities, except as permitted under such laws. The Company was required to transfer additional shares of stock aggregating $10,800 of value per month to Destiny pursuant to the settlement agreement. Through December 31, 2001, 30,000 shares have been liquidated for proceeds of $66,733.
On June 5th, 2000, Netmynd Inc. filed a lawsuit against us (Los Angeles Superior Court Case # SG061720) claiming that the Company owed a contract obligation for construction of proprietary e commerce solution amounting to $300,000.
On January 11, 2002, the Company settled both outstanding lawsuits with one agreement for a payment to both parties totaling $250,000 payable in cash of $180,000 and stock of $70,000 as further described below. The cash is payable in four equal monthly payments of $45,000 beginning February 1, 2002 through May 1, 2002. In addition to the cash payments, the Company agrees to transfer to the claimants within six months freely trading common stock in up to 10 public companies having a market value of $70,000 . To date, the Company is in default because it has not paid all of the required installments.
NOTE G - NOTES PAYABLE
In January, 2002, the James Barclay Alan Ltd. borrowed from Gateway Growth Funds $68,000 and $25,000 for working capital prior to the completion of the share purchase agreement which made James Barclay Alan Ltd. a wholly owned subsidiary of the Company. The notes are payable April 1 and April 4, 2002 respectively, with interest computed at 2%. To date, no payments have been made.
NOTE H - LIABILITIES TO BE PAID IN COMMON STOCK
On January 15 and 22 2002, the Board of Directors authorized the issuance of the Company's shares that were issued in April 2002 and valued as follows:
Shares Service Value
------- ------- ------
Marc Pitcher
Chairman 400,000 Payment for services $120,000
Chris Dieterich
Legal council 47,000 Outstanding Invoice 7,000
------- --------
447,000 $127,000
======= ========
|
These shares were not issued as of March 31, 2002, and are eligible for resale under an S-8 registration filed April 2, 2002.
NOTE I - ACQUISITIONS
On January 11, 2002, the registrant entered into an agreement to acquire 100% of the issued and outstanding common stock of Bermondsey Investments Inc., ("Bermondsey") from the sole shareholder of Bermondsey in exchange for an aggregate of 5,000,000 shares of the Registrant's restricted common stock valued at $440,000.
In 2002 the Company formalized an agreement entered into in 2001 to surrender its 30% interest membership in Turn-Key Entertainment LLC in consideration for Turn-Key releasing the Company from debt owed to Turn-Key in the amount of approximately $20,000 and for Turn-key's principle, Sid Amira, a consultant to the Company, releasing the Company from all obligations pursuant to all agreements. This transaction was recorded as of December 31, 2001.
On February 19, 2002, the Company announced that it had agreed to complete the purchase of James Barclay Alan, Ltd. (formerly Bermondsey Investments, Ltd) in exchange for 5,000,000 shares of its restricted common stock. Upon completion of the transaction, former shareholders of James Barclay Alan, when aggregated, would own approximately 42 per cent of the equity of the Company. The Company affected a name and symbol change on February 22, 2002, the new symbol being JBAI and the name changed to James Barclay Alan, Inc. The initial 8-K reporting these events was filed on February 26, 2002.
Because Bermondsey was a holding company for only a few investment banking contracts and had no other activities, the transaction does not constitute a business combination because the Registrant did not acquire an ongoing business. Therefore, financial statements and pro forma financial information are not required to be provided in connection with this transaction. The $440,000 was charged to Write-off of investment in subsidiary as there was no significant value from contracts acquired.
In 2002 the Company formalized an agreement entered into in 2001 to surrender its 30% membership interest in Turn-Key Entertainment LLC in consideration for Turn-Key releasing the Company from debt owed to Turn-Key in the amount of approximately $20,000 and for Turn-key's principle, Sid Amira, a consultant to the Company, releasing the Company from all obligations pursuant to all agreements. Pursuant to all agreements this transaction was recorded as of December 31, 2001.
NOTE J - SUBSEQUENT EVENTS
In April 2002, due to the Company's inability to make timely payments for its leased office space in New York, it was served with legal notice by the Landlord to vacate the premises. On June 6, 2002, the Landlord took legal proposition of the premises, and on June 13, the Company moved to new offices. As a condition to the Company's lease with the former landlord, the Company had provided a security deposit in the amount of $177,840, in the form of a Letter of Credit that it had accounted for in its financial statements as an asset under restricted cash. As a result of the Company's loss of its leased premises, it has forfeited the security deposit to the landlord, and will adjust its financial statement to reflect the loss of the restricted cash asset. The Company has had no further correspondence from the Landlord indicating if there will be any further liability connected to the lease, but under the Lease terms the Company may be liable for any additional rent up to the end of the original lease period less the amount of the security deposit if the landlord is unable to re-lease the premises.
In May of 2002, Rodney Gellineau, who was hired as President and CEO of the Company in January 2002 indicated that he was stepping down to pursue personal business interests in Canada. The Company has accrued liabilities for unpaid salary of $5000, notes payable for funds advanced to the Company of $17,099 and miscellaneous expenses due Mr. Gellineau, but is as of the date of this quarterly filing unsure what the status of these liabilities is since written requests for clarification from the Company to Mr. Gellineau have remained unanswered and the Company is researching whether he is in breach of his employment contract for departing without proper notice.
In June 2002, the Company entered into a one-year sublease with Divix Corp. for new office space. Rent on a Monthly basis is $2470 with additional monthly charges of $359 for utilities. The Lease expires June 30, 2003 and the Company has an option to renew at the then market rate.
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
DESCRIPTION OF BUSINESS.
The Company was incorporated on August 26, 1998 under the name Sierra Gold Corporation. On January 4, 1999, Sierra Gold Corporation changed its name to Payforview.com Corp. The Board of Directors approved on April 17, 2001 to change the name of the Company from PayForView.com Corp to PayForView Media Group Holdings Corp. and then in January 2002 pursuant to a Board of Directors approved plan of reorganization and decision to abandon the on-line streaming media industry, the Company changed its name to James Barclay Alan Inc. (the "Company" or "JBA") The Company's current trading symbol is JBAI.
JBA will generate fee and commission based revenues from its combined services and capital solutions that include investment banking consulting services, merchant banking, syndication, fund management and securities brokerage. JBA markets its services and deals strictly with revenue producing companies that have a three-year minimum track record, positive operating cash flows and a strong potential to be listed on AMEX or NASDAQ within two years. This is the same success generating criteria that is used by the Company's founding members in their private practices.
We have not had any significant revenue from continuing operations. We have incurred a cumulative net loss in our development stage of approximately $23,168,305 through March 31, 2002. We expect to continue to incur substantial and increasing losses during our development stage.
The Company was previously engaged in the on-line streaming media industry as an integrated on-line and off-line broadcaster of entertainment and information and gained broad experience and expertise in the on-line streaming, rich-media and advertising sectors. Since launching the PayForView.com website in April of 2000, the Company had distributed movies, music, sports and live events direct to viewers on a pay-for-view, retail and e-commerce basis. The Company also used its streaming media expertise and a proprietary, rich-media template to design on-line advertising and marketing solutions. Additionally, the Company owned several other interests. Turn-Key Entertainment, (in which the company held a 30% interest) is building an on-line, pay-per-view industry product that was synergistic with the Company's core business. Voyager Films and Voyager Film Sales, two wholly owned subsidiaries of the Company, were engaged in the packaging and financing of motion pictures.
The collapse of the consumer oriented streaming media industry and subsequent economic downturn made the prospects of successfully operating or raising additional funds for the Company remote. The Board of Directors approved and put into action a plan of reorganization in January 2002 with the purchase of Bermondsey Investments, and began operations under its new name, James Barclay Alan Inc.
James Barclay Alan Inc. is an investment banking and securities firm that provides unique financial services to micro-capitalized companies and investors in the NAFTA trading zone (USA, Mexico, Canada and the Caribbean). JBA has been organized as a professional association of investment banking and brokerage specialists who implement, from concept, creative debt or equity financial solutions for companies in the USA, Canada, Mexico and the Caribbean. JBA continuously cultivates the specialty knowledge of its representatives to provide advantageous cross- border financial solutions and excellent high yield, asset backed investment opportunities.
Our executive offices are located at 18 East 16th Street, Suite 302, New York, New York 10003, and our telephone number is (212) 201-6900.
Results of Operations.
Three Months ended March 31, 2002 as compared to the three months ended March 31, 2001
Revenues.
We had no significant revenues from continuing operations from our inception on April 6, 1998 to date.
Selling, general and administrative expenses:
Selling, general and administrative expenses decreased to $384,474 for the three months ended March 31, 2002 from $1,024,450 for the three months ended March 31, 2001, which is a net decrease of $639,976. The decrease was primarily due to decreases in personnel costs, consulting fees and financing fees of $577,844 (of which $443,738 was non-cash equity based compensation) and a decrease in professional fees, travel, web events and development and decrease in advertising and promotion of $72,582.
Amortization of Licenses Fees:
We had amortization of license fees and goodwill of none and $41,427 for the three months ended March 31, 2002 and 2000 respectively. The decrease is due to the write off of $760,683 of certain license agreements when management determined the carrying value was not fully recoverable due to the Company's change in business focus.
Write-off - investment in subsidiary
The $440,000 of expense during the three months ended March 31, 2002 represents the acquisition of James Barclay Alan Ltd. and was expensed in accordance with generally accepted accounting principles since it was determined there was no significant value from the contracts in the business acquired.
Interest Income:
Interest income for the three months ended March 31, 2002 was $7,487 as compared to $4,962 for March 31, 2001. This is due to interest earned on the restricted cash on deposit for the Company's main office lease.
Interest Expense:
Interest expense for the three months ended March 31, 2002 was $7,753 compared to none for the three months ended March 31, 2001. The increase is the interest attributed to the notes payable in the amount of $85,000 and $17,099.
Liquidity and Capital Resources
Since inception through March 31, 2002, we had a deficit accumulated during the development stage of approximately $23.2 million and expect to continue to incur losses for the next several years. We have financed our operations primarily through private placements of our common stock.
We used net cash in operating activities of $130,981 for the three Months ended March 31, 2002. Net cash and cash equivalents used in operations for the three months ended March 31, 2002 primarily consisted of the net loss from continuing operations of $814,240 less non cash items of $590,923 and an increase in accounts payable of $112,178.
Net cash used in investing activities of $54,304 for the three months ended March 31, 2002 primarily consisted of a partial settlement payment of $62,500 for outstanding liabilities from discontinued operations offset by interest income of $8,932 from liquidation of certificate of deposit.
Net cash provided by financing activities was $186,552 for the three months ended March 31, 2002. Cash provided by financing activities consisted of proceeds from the sale of our preferred stock of $70,240, proceeds from sale of debentures of $15,000, loans from hedge fund of $85,000 and loans from officers of $17,099.
Our capital funding requirements will depend on numerous factors, including the progress and magnitude of our investment banking business development, availability of investment capital from outside sources, technological advances in the financial services industry, competitive and market conditions, our ability to establish and maintain collaborative arrangements and attract investment banking clients and the effectiveness of commercialization activities and arrangements.
In February 2002, the Company approved a private placement for Canadian residents only, to raise up to $1,000,000 via either Class "A" Preference Shares or Convertible Debentures. For the Class "A" Preference Shares, the minimum price per security is $1,000 with a minimum subscription of $7,000. The cumulative dividend is 11% per year paid quarterly starting June 30, 2002 and the holder is eligible to convert starting at $.50 per share on or before June 30, 2002 up to $1.50 per share until June 30 2003. $73,000 has been sold through April 15, 2002. The Debentures are unregistered and convertible into common shares of the Company with interest to accrue at the rate of 8.5% per year paid semi-annually. The Debenture holders have the right to convert one third of the debt into common shares of the Company every six months beginning June 30, 2002 at $0.60, $1.10 and $1.60 per share respectively. The interest payments will be made commencing June 30, 2002 and December 31, 2002. The interest payments will be made commencing June 30, 2002 and December 31, 2002. $15,000 has been sold to date.
We are likely to require substantial funding to continue our website development, marketing, sales, and administrative activities. We have raised funds in the past through the sale of securities, and may raise funds in the future through public offerings or private placements of securities, collaborative arrangements or from other sources. Historically, the Company has been successful in meeting ongoing cash requirements with equity placements, both public and private. However, there can be no assurance that discussions will result in any investments, collaborative arrangements, agreements or funding, or that future additional financing through debt or equity financing will be available to us on acceptable terms, if at all. Further, there can be no assurance that any arrangements resulting from these discussions will successfully reduce our funding requirements.
If additional funding is not available to us when needed, we will be required to scale back our website development, marketing and administrative activities and our business and financial results and condition would be materially and adversely affected. As of March 31, 2002, we do not have sufficient working capital to sustain operations through December 31, 2002. We will pursue opportunities to finance operations and satisfy cash requirements with a combination of debt financing, stock sales, and, in the longer term, revenue from operations.
Among the options available to and being considered by management to ensure the Company has sufficient working capital for the next twelve months are a) plans to reduce or delay expenditures, b) plans to increase cash flow through acquisitions, c) plans to borrow money using the assets and cash flow of potential acquisitions and d) plans to increase ownership equity through various funding vehicles including convertible debentures, private placements and registration of shares for sale to the public. There can be no assurances that any of these opportunities will be successful.
PART II
ITEM 1. LEGAL PROCEEDINGS
We are subject to claims and suits arising in the ordinary course of business. At this time it is not possible to estimate the final outcome of these legal matters or the ultimate loss or gain, except as otherwise stated.
On February 5, 2000, Destiny Music ("Destiny") filed a lawsuit against us (Los Angeles Superior Court Case #BC225482), claiming that the Company owed a long-term lease obligation, further financial support on certain projects and/or group promotional efforts and a return of funds allegedly loaned to Street Solid Records, a subsidiary of the Company at the time, which have not been returned as promised.
On November 8, 2000 the Company settled the outstanding lawsuit with Destiny for $325,000 subject to adjustment to $350,000. In November 2000 the company paid $25,000 in cash to Destiny. The remainder was payable either in cash or through the liquidation of shares of the company's common stock. On December 6, 2000, 50,000 shares were issued to Destiny to be liquidated to settle the remaining obligation of $300,000. The Company was required to pay Destiny a monthly minimum of $25,000, which was payable either in cash or through the liquidation of shares. Destiny is restricted under certain securities laws from selling these securities, except as permitted under such laws. The Company was required to transfer additional shares of stock aggregating $10,800 of value per month to Destiny pursuant to the settlement agreement. Through December 31, 2001, 30,000 shares have been liquidated for proceeds of $66,733.
On June 5th, 2000, Netmynd Inc. filed a lawsuit against us (Los Angeles Superior Court Case # SG061720) claiming that the Company owed a contract obligation for construction of proprietary e commerce solution amounting to $300,000.
On January 11, 2002, the Company settled both outstanding lawsuits with one agreement for a payment to both parties totaling $250,000 payable in cash of $180,000 and stock of $70,000 as further described below. The cash is payable in four equal monthly payments of $45,000 beginning February 1, 2002 through May 1, 2002. In addition to the cash payments, the Company agrees to transfer to the claimants within six months freely trading common stock in up to 10 public companies having a market value of $70,000. To date, the Company is in default because it has not paid all of the required installments.
ITEM 2. CHANGES IN SECURITIES
In 2002, the following transactions occurred:
On January 11, 2002, the registrant entered into an agreement to acquire 100% of the issued and outstanding common stock of Bermondsey Investments Inc., ("Bermondsey") from the sole shareholder of Bermondsey in exchange for an aggregate of 5,000,000 shares of the Registrant's restricted common stock valued at $440,000.
In 2002 the Company formalized an agreement entered into in 2001 to surrender its 30% membership interest in Turn-Key Entertainment LLC in consideration for Turn-Key releasing the Company from debt owed to Turn-Key in the amount of approximately $20,000 and for Turn-key's principle, Sid Amira, a consultant to the Company, releasing the Company from all obligations pursuant to all agreements. Pursuant to all agreements this transaction was recorded as of December 31, 2001.
In February 2002, the Company approved a private placement for Canadian residents only, to raise up to $1,000,000 via either Class "A" Preference Shares or Convertible Debentures. For the Class "A" Preference Shares, the minimum price per security is $1,000 with a minimum subscription of $7,000. The cumulative dividend is 11% per year paid quarterly starting June 30, 2002 and the holder is eligible to convert starting at $.50 per share on or before June 30, 2002 up to $1.50 per share until June 30 2003. $73,000 has been sold through April 15, 2002. The Debentures are unregistered and convertible into common shares of the Company with interest to accrue at the rate of 8.5% per year paid semi-annually. The Debenture holders have the right to convert one third of the debt into common shares of the Company every six months beginning June 30, 2002 at $0.60, $1.10 and $1.60 per share respectively. The interest payments will be made commencing June 30, 2002 and December 31, 2002. The interest payments will be made commencing June 30, 2002 and December 31, 2002. $15,000 has been sold to date.
In February 2002 the Company issued 20,000 shares to directors for annual fees for services at Board members and 25,000 shares to a consultant for services rendered values at $4,000 and $5,000 respectively.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
February 26, 2002, acquisition of Bermondsay Investments Ltd. April 29, 2002, no audit requirement for acquisition of Bermondsay Investments Ltd.
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form 10QSB and has duly caused this Registration Statement on Form 10QSB to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, State of New York, on the 27th day of June, 2002.
James Barclay Alan Inc.
By: /s/ Marc Pitcher
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Marc Pitcher
Chairman of the Board
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SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the Registrant has caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.
Signature Title Date --------- ----- ---- /s/ Marc Pitcher Chairman of the Board June 28, 2002 Marc Pitcher of Directors /s/ George Mellides Chief Financial June 28, 2002 George Mellides Officer |