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PLRP -.0014 -
From the website - a new product launch is scheduled for the first week of April. The product is DATA-Protector and the targets are corporations and Governmental Agencies. From .0014 PLRP should go far!! Check it out!! http://www.pacel.com/
Here's the link to the launch date: http://www.pacel.com/Investor/index.cfm?fuseaction=faq
With regard to PLRP - there's more news coming, it seems!
The website is quite impressive www.pacel.com and displays an item to be launched in the "1st Quarter, 2002". The item is called DATA-Protector and has already been added to the site. It's a software product that protects computers against viruses. Keep an eye on PLRPt today and the rest of the week. News of the launch may be on the way.....It's trading at .0014
PLRP(.0012) moving on heavy volume!
Moving on news. Near lows.
Heads up on ELNE for March 18.
From the most recent filing:
"The Company has established an independent record label named Street Flavor International Records. The label's first project, which features a group named "The Burnaz", has a release date of March 18, 2002. The dynamic rap group has samples of their music available at http://www.burnaz.net/ ELine Entertainment is reviewing multiple country, rap and rock music projects for production, and plans additional releases in the third and fourth quarters of 2002. "
Heads up on ELNE for March 18.
From the most recent filing:
"The Company has established an independent record label named Street Flavor International Records. The label's first project, which features a group named "The Burnaz", has a release date of March 18, 2002. The dynamic rap group has samples of their music available at http://www.burnaz.net/ ELine Entertainment is reviewing multiple country, rap and rock music projects for production, and plans additional releases in the third and fourth quarters of 2002. "
Eline Entertainment
(OTCBB:ELNE) www.elinemusic.com/
assists emerging artists and record lables by providing a format for discovery and for total production. See the site to discover elinemusic.com! I've printed out a sample contract, so that you can see the possibilities of ELNE - trading at .065
--------------------------------------------------------------------
label/artist application
License Agreement
For and in consideration of one dollar and other good and valuable consideration, lowroller does hereby grant a non-exclusive license to Elinemusic.com to use musical compositions it owns, controls, or has the right to own or control on what is generally known as the Internet. Details of this agreement are as follows:
1. This license is for a period of 60 months commencing on the date of execution of this agreement.
2. All product released to Elinemusic.com under this agreement will be made available for sale to the public to download at a price of $8.00 per album/or $1.00 per single song. Albums with more then 15 songs may be sold as a double album for $14.00.
3. Any merchandise lowroller and/or its artists makes available for sale (i.e. CD's cassettes, t-shirts, caps, etc.) on Elinemusic.com will be sold at a price set by record company and/or artists. Elinemusic.com reserves the right to refuse sale of any product we may deem inappropriate for out site. Elinemusic.com will take the order(s) for merchandise and forward the order(s) to the record company after deducting Elinemusic.com's share of revenue from the order(s). Record company will be responsible for filling the order. Record company therefore warrants that they will put forth their best efforts to fill all orders with due speed. Failure to do so may result in Elinemusic.com dropping record company's merchandise from the network. This will in NO WAY detract from or cancel any other part of this agreement.
4. All revenues from sales of product under this agreement will be split 50/50 between Elinemusic.com and the record company in this agreement. The record company will set and receive shipping and handling costs on all items other than downloads. Elinemusic.com will keep any applicable sales taxes. Itemized statements will be provided every 90 days to the record company with payment for sales (if any) of record company's product on Elinemusic.com
5. Elinemusic.com agrees to use its best efforts to promote the licensed product in order to produce the maximum revenue for both parties to this License Agreement.
Agreed to this 9th day of March, 2002
By:_______________________________________
(Label/Artist/Record Company)
By:_______________________________________
(ElineMusic)
Please Send a copy of the license agreement along with your album(s), Bio, Videos & Photos to:
Elinemusic.com
Dept: Distribution
14 North 6th Street 3rd Floor
Stroudsburg, PA 18360
Looking around the ELNE site
I decided to see what their contract looks like. It seems to be a sweet deal for everyone concerned and SO many budding artists who are trying desperately to be discovered might jump at the chance to take advantage of the elinemusic.com offer.
-----------------------------------------------------------------
Eline Entertainment (OTCBB:ELNE) www.elinemusic.com/
assists emerging artists and record lables by providing a format for discovery and for total production. See the site to discover elinemusic.com! I've printed out a sample contract, so that you can see the possibilities of ELNE - trading at .065
--------------------------------------------------------------------
label/artist application
License Agreement
For and in consideration of one dollar and other good and valuable consideration, lowroller does hereby grant a non-exclusive license to Elinemusic.com to use musical compositions it owns, controls, or has the right to own or control on what is generally known as the Internet. Details of this agreement are as follows:
1. This license is for a period of 60 months commencing on the date of execution of this agreement.
2. All product released to Elinemusic.com under this agreement will be made available for sale to the public to download at a price of $8.00 per album/or $1.00 per single song. Albums with more then 15 songs may be sold as a double album for $14.00.
3. Any merchandise lowroller and/or its artists makes available for sale (i.e. CD's cassettes, t-shirts, caps, etc.) on Elinemusic.com will be sold at a price set by record company and/or artists. Elinemusic.com reserves the right to refuse sale of any product we may deem inappropriate for out site. Elinemusic.com will take the order(s) for merchandise and forward the order(s) to the record company after deducting Elinemusic.com's share of revenue from the order(s). Record company will be responsible for filling the order. Record company therefore warrants that they will put forth their best efforts to fill all orders with due speed. Failure to do so may result in Elinemusic.com dropping record company's merchandise from the network. This will in NO WAY detract from or cancel any other part of this agreement.
4. All revenues from sales of product under this agreement will be split 50/50 between Elinemusic.com and the record company in this agreement. The record company will set and receive shipping and handling costs on all items other than downloads. Elinemusic.com will keep any applicable sales taxes. Itemized statements will be provided every 90 days to the record company with payment for sales (if any) of record company's product on Elinemusic.com
5. Elinemusic.com agrees to use its best efforts to promote the licensed product in order to produce the maximum revenue for both parties to this License Agreement.
Agreed to this 9th day of March, 2002
By:_______________________________________
(Label/Artist/Record Company)
By:_______________________________________
(ElineMusic)
Please Send a copy of the license agreement along with your album(s), Bio, Videos & Photos to:
Elinemusic.com
Dept: Distribution
14 North 6th Street 3rd Floor
Stroudsburg, PA 18360
I thought that this was interesting: http://www.pinksheets.com/quote/quote.jsp?symbol=ASGXF
(it shows asia crossing up by 111% on Friday - to .38)
I wasn't watching it and didn't notice it until today...
Hey greenhorn!
Enjoying today as much as I was squirming yesterday....I'm riding AGTP free shares now and looking at another WLDI run....Take a look at ELNE - elinemusic.com - They recently dropped the E and move on low volume.
Also keep an eye on CNGG - They're finalizing acquisition plans that they announced regarding productive oil wells.
TKRNE losing the E
according to daily list. Looking for another "daily double" .......
BB, I've been watching FCRI(E) for awhile.
It typically has very low volume and has not undergone the massive dilution of the other stocks like MTNA, AMJC and IRAC. Management has canceled 30 million shares and rescinded the going-nowhere deal with agentswanted. I'm not saying that theres a great business plan here because I don't know. I'm just saying that a speculative buying of a million shares for 200 bucks (its market cap is, what, 11 thousand dollars?) could bring a high reward if there is a surge of interest. I know how you feel about NV stocks and I wouldn't risk more than 200 bucks here - That's all that I have in it! (actually the risk is just a hundred bucks, cause you can always sell for a hundred.) Watch it for a couple of days to see what happens - just for fun....
Keep an eye out for FCRIE(.0001/.0002) today.
The PR says that it's now a shell, having rescinded its last year's agreement. IR said that they will have their filings in so that they don't go pink. But you how that is....If you get in, try to buy in lots of 500K (100 bucks), sell half when it doubles and ride the free shares. Here's the PR from yesterday evening: (Note this part - The Company is seeking other business opportunities and is in negotiations with a possible candidate.)
Fortune Credit & Insurance Services Inc. Announced Today Rescission of the
AgentsWanted.Net Inc. Agreement and Revised Plan of Reorganization
KIRKLAND, Wash--(BUSINESS WIRE)--March 6, 2002--Fortune Credit & Insurance Services, Inc. (OTCBB:FCRIE -
news) announced a Plan of Reorganization and Share Exchange Agreement dated as of June 4, 2001 was entered into
between the Company and AgentsWanted.Net Inc. (the ``Agents Agreement'') which closed in July, 2001.
The Company's capital formation plan, including the plan to finance implementation of Agent's business development plan
has been adversely affected by a number of economic factors beyond the control of the Company including:
The effects of the general rescessionary economy
The recent general slide in the telecommunications industry has negatively impacted the Company's telecommunications
services subsidiary, Saratoga Telecom Corp.
The impact of the general decline in the stock market, coupled with the World Trade Center incident resulted in a
curtailment in financing development stage businesses by many traditional financing sources.
As a consequence, the Company has been unable to raise capital sufficient to finance its business development plan. The
Agents Agreement and related Plan of Reorganization failed to culminate in the manner expected and intended by the parties
thereto. Due to the aforementioned factors, the Company has recently adopted a revised plan of reorganization and has taken
various action steps including the following:
1. Rescission of Agents Agreement
The Company and the former principals of Agents have mutually
agreed to a rescission of the June 4, 2001 Agents Agreement under
a Rescission Agreement dated as of February 4, 2002. Under the
Rescission Agreement, the Company has agreed to return ownership
of AgentsWanted.Net Inc. to Agents former owners. The 30,000,000
shares of the Company's common stock and the 15,000,000 shares of
the Company's Series "B" Preferred stock are to be returned to, or
made available to the Company, or otherwise cancelled. As of
February 27, 2002 over 80% of such shares have been made available
to the Company and other terms and conditions of the Rescission
Agreement have substantially been consummated.
2. Discontinuance of Saratoga Telecom Corp's Operations
As previously reported in the Company's Form 10-Q filed for the
quarterly period ended July 31, 2001, the operations of Saratoga
Telecom Corp. were discontinued on or about July 31, 2001.
3. Cancellation of Saratoga Telecom Corp. Spin-Off and Issuance
of Warrants
Under the June, 2001 Plan of Reorganization, the Company planned
and intended to consummate a spin-off of Saratoga Telecom Corp.
and to issue common stock purchase warrants to the Company's
stockholders. Due to the aforementioned financial adversities
affecting the Company, the rescission of the Agents Agreement and
the discontinuance of Saratoga Telecom Corp's operations, the
Board of Directors determined that the intended June, 2001 Plan of
Reorganization had been adversely affected by events unforeseen at
the time the plan was adopted. Further, due to the above factors,
the current low price of the Company's stock, and lack of market
for Saratoga Telecom Corp's stock, there would be little or no
value to the Company's stockholders by completing the spin-off of
Saratoga Telecom Corp. or the issuance of Company warrants to the
stockholders. Therefore, the June, 2001 Plan of Reorganization has
been terminated and the related plan to spin-off Saratoga Telecom
Corp. and issue Company warrants has been cancelled.
The Company is seeking other business opportunities and is in negotiations with a possible candidate. Further information
will be made available upon concluding any substantive agreements.
The Company's newly appointed auditors have recently commenced their audit of the Company's financial statements for the
fiscal year ended October 31, 2001. The Company is also in the process of preparing the related annual Form 10-KSB and
plans to file it as soon as the audit and the Form 10-KSB are available for filing.
Contact: FCRI can be contacted by calling Cory Weber at (425) 827-7817. This press release contains forward-looking
statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Expression
of future goals and similar expressions reflecting something other than historical fact involve risks and uncertainties. The
actual results the company achieves may differ materially from any forward-looking statements due to such risks and
uncertainties. To find out more about the company's stock logon to www.otcinfo.net.
Also CNGG due to close an acquisition soon - Should Pop!
Cambridge Energy Corporation Enters Into Letter of Intent
to Acquire Producing Oil & Gas Properties in Southern Louisiana
LAFAYETTE, La.--(BUSINESS WIRE)--Feb. 28, 2002--Cambridge Energy Corporation (OTCBB:CNGG - news), an oil &
gas exploration and production company with producing properties in Louisiana, announced today that it has signed a letter
of intent to acquire producing oil and gas properties in Southern Louisiana.
The signing of the letter of intent is Cambridge's first transaction with this Southern Louisiana local company. The eventual
acquisition would include the operations of six wells with current production of approximately $1.5 million annually.
The acquisition is subject to completion of satisfactory due diligence and the signing of a definitive agreement. However,
based upon review of engineering reports, management estimates the property to have in excess of a PV10 (present value at
a 10% discount) value of $9 million in proven, developed reserves.
Perry West, Chairman and CEO of Cambridge Energy, stated, ``The signing of this letter of intent represents yet another
significant step in our aggressive campaign to acquire properties with proven reserves.''
This press release includes forward-looking statements that are made pursuant to the ``safe harbor'' provisions of the Private
Securities Litigation Reform Acts of 1995. While these statements are made to convey to the public the Company's progress,
business opportunities, and growth prospects, readers are cautioned that such forward-looking statements represent
management's opinion. Whereas management believes such representations to be true and accurate based on information and
data available to the Company at this time, actual results may differ materially from those described. The Company's
operations and business prospects are always subject to risk and uncertainties. Important factors that may cause actual
results to differ are set forth in the Company's periodic filings with the U.S. Securities and Exchange Commission.
GONT news
Yes I own a good lot of shares that I bought on Valentine's Day when they announced big time rev projections.
It ran to 5 or 6 cents and then settled at its present level of .038 or so. I'm confident that the accelerated revs will drive the stock price way north.
AGTP due to close this month.
AGTP will become Plenum Wireless as the SHELL is merged into by a developing stage wireless company, located in Texas.
From the filing 2/19/02
Item 5. Other Events.
(a) Letter of Intent. On February 8, 2002, the Company executed a letter of intent to acquire all of the
issued and outstanding shares of Plenum Wireless, Inc., ("Plenum"), a private, development stage
wireless mobile computing and communications products business based in Georgetown, Texas. The
letter of intent is binding subject to satisfactory completion of due diligence, no financial losses being
suffered by Plenum and no material changes occurring in Plenum management and other conditions to
closing. It is contemplated that the letter of intent will be replaced with a formal Agreement.
Watch GONT today!
Posted record numbers - Here's the PR:
Go Online Networks Corp. Continues Accelerated Revenue
Pace by Booking $1.13MM in Revenues for February 2002
3,600 Refurbished Units in February Set New Company Record
BUENA PARK, Calif.--(BUSINESS WIRE)--March 6, 2002--Joe Naughton, CEO, of Go Online Networks Corp.
(OTCBB:GONT - news) announced today that February revenue figures have exceeded $1.13 million bringing the total 2002
yearly revenue figures in excess of $2 million.
Go Online Network's primary operating division Digital West Marketing refurbished over 3,600 personal computer units
including 2,700 desktop systems and 900 laptops/PDAs for the month of February.
``The customer demand for our products continues to be strong as more and more dealers become aware of Digital West's
quality refurbishing skills,'' stated Joe Naughton, CEO of Go Online Networks Corp. ``Gross margins for the month remained
strong as our pipeline of returned PC systems steadily improved.''
Digital West's General Manager Kerwin Burns added, ``Our sales strength is clearly price based, but without performing
quality refurbishing services our customers would not keep coming back for more inventory. Our team of technicians is
getting more and more efficient in the refurbishing process. Sorting, culling and prioritizing the inspection and technical
diagnostic process is reaching impressive productivity levels. We also identified certain buying opportunities of peripheral
products including monitors that have enhanced our profit and revenue picture attractively.''
Digital West is actively seeking larger industrial space to accommodate its burgeoning growth. It is anticipated that the
company could further increase sales and productivity levels by expanding into a larger facility enabling a more streamlined
and efficient production process. The management team is also actively seeking refurbishing contracts in related
non-computer consumer electronics, such as cam-corders, VCRs, televisions, stereos and CD/DVD players.
About Go Online Networks
Go Online Networks Corp. is a Southern California-based technology holding company. Currently, its major operating
subsidiary Digital West Marketing Services Inc. is an emerging player in the $100 billion Electronic Manufacturing Services
(EMS) sector. 2001 revenues exceeded $6 million. The core of Digital West's revenue is derived from acquiring personal
computers from retailers and manufacturers then refurbishing the product to manufacturers' specifications and then reselling
the products to the secondary markets. In 2001, the company generated revenue in excess of $6 million representing over
12,000 total computers refurbished and resold. 75 percent of the company's revenues are derived from the sale of desktop
system (CPU and monitor), 20 percent notebooks, and 5 percent personal digital assistants (PDA). The company has
received refurbishing authorization from several of the largest computer manufacturers in the world in order to resell these
products as factory authorized refurbished computers.
This press release contains forward-looking statements made pursuant to the safe harbor provisions of the Private Litigation
Act of 1995. Expression of future goals and similar expressions reflecting something other than historical fact involve risks
and uncertainties. The actual results the company achieves may differ materially from any forward-looking statements due to
such risks and uncertainties.
GONT NEWS!!
More good news on GONT Revs!
Go Online Networks Corp. Continues Accelerated Revenue
Pace by Booking $1.13MM in Revenues for February 2002
3,600 Refurbished Units in February Set New Company Record
BUENA PARK, Calif.--(BUSINESS WIRE)--March 6, 2002--Joe Naughton, CEO, of Go Online Networks Corp.
(OTCBB:GONT - news) announced today that February revenue figures have exceeded $1.13 million bringing the total 2002
yearly revenue figures in excess of $2 million.
Go Online Network's primary operating division Digital West Marketing refurbished over 3,600 personal computer units
including 2,700 desktop systems and 900 laptops/PDAs for the month of February.
``The customer demand for our products continues to be strong as more and more dealers become aware of Digital West's
quality refurbishing skills,'' stated Joe Naughton, CEO of Go Online Networks Corp. ``Gross margins for the month remained
strong as our pipeline of returned PC systems steadily improved.''
Digital West's General Manager Kerwin Burns added, ``Our sales strength is clearly price based, but without performing
quality refurbishing services our customers would not keep coming back for more inventory. Our team of technicians is
getting more and more efficient in the refurbishing process. Sorting, culling and prioritizing the inspection and technical
diagnostic process is reaching impressive productivity levels. We also identified certain buying opportunities of peripheral
products including monitors that have enhanced our profit and revenue picture attractively.''
Digital West is actively seeking larger industrial space to accommodate its burgeoning growth. It is anticipated that the
company could further increase sales and productivity levels by expanding into a larger facility enabling a more streamlined
and efficient production process. The management team is also actively seeking refurbishing contracts in related
non-computer consumer electronics, such as cam-corders, VCRs, televisions, stereos and CD/DVD players.
About Go Online Networks
Go Online Networks Corp. is a Southern California-based technology holding company. Currently, its major operating
subsidiary Digital West Marketing Services Inc. is an emerging player in the $100 billion Electronic Manufacturing Services
(EMS) sector. 2001 revenues exceeded $6 million. The core of Digital West's revenue is derived from acquiring personal
computers from retailers and manufacturers then refurbishing the product to manufacturers' specifications and then reselling
the products to the secondary markets. In 2001, the company generated revenue in excess of $6 million representing over
12,000 total computers refurbished and resold. 75 percent of the company's revenues are derived from the sale of desktop
system (CPU and monitor), 20 percent notebooks, and 5 percent personal digital assistants (PDA). The company has
received refurbishing authorization from several of the largest computer manufacturers in the world in order to resell these
products as factory authorized refurbished computers.
This press release contains forward-looking statements made pursuant to the safe harbor provisions of the Private Litigation
Act of 1995. Expression of future goals and similar expressions reflecting something other than historical fact involve risks
and uncertainties. The actual results the company achieves may differ materially from any forward-looking statements due to
such risks and uncertainties.
Level 2 lineup (ELNE)
Bid side ........... Ask side
NITE 0.0550 50 ............ SCHB 0.0600 50
GVRC 0.0530 50 ............ FLTT 0.0650 50
CCCC 0.0525 50 ............ MHMY 0.0800 50
MHMY 0.0500 50 ............ NITE 0.0950 50
LTCO 0.0450 50 ............ HILL 0.1000 50
HRZG 0.0400 50 ............ AGIS 0.1100 50
WIEN 0.0300 50 ............ PGON 0.1200 50
PGON 0.0200 50 ............ GVRC 0.2000 50
LCAM 0.0100 50 ............ WIEN 0.6000 25
............ FRAN 1.0100 5
............ LCAM 2.0000 5
ELNE (.06)discovered!
ELNE was trading in the .65 cent range in mid Dec. It received and E and dropped all the way to .055. Now that it has filed, it's going to fly, IMO. Impressive website http://www.elinemusic.com/ and plans for expansion, attractive stock structure (low outstanding/float) all add up to make a winner at .06
Check out the website and the filings (pasted on Patsy's site for convenience)
Just discovered - ELNE (elinemusic.com)(.06)
Huge upside potential, IMO. Here's the whole filing:
[Notice the low float, low price and check out the website. It will run when word gets around]
www.elinemusic.com/
Received date - Feb. 28, 2002
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C 20549
Form 10-KSB
Annual Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
For: Fiscal year ended October 31, 2001.
ELINE ENTERTAINMENT GROUP, INC.
(Exact name of small business issuer as specified in its charter)
Nevada
(State or other jurisdiction of incorporation or organization)
000-30451
(Commission File Number)
88-0429856
(I.R.S. Tax ID Number)
14919 Lebanon Rd., Old Hickory, TN 37138
(Address of Principal Executive Offices and Zip Code)
(615) 754-1871
(Issuer's telephone number)
ELine Music.com
14919 Lebanon Rd., Old Hickory, TN 37138
(Former name and former address)
(Mark One)
[X] Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended October 31, 2001.
[] Transition report under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from to
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Common
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No []
Check if there is no 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 registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [X]
Revenues for the year ended October 31, 2001 totaled $17,861.
Aggregate Market Value of Voting and Non-Voting Common equity held by non-affiliates: $66,307
Number of Shares Outstanding as of October 31, 2001: 4,153,667
Documents incorporated by reference:
Proxy Statement Filed on March 16, 2001: Part I, Item 4
PART I
Item 1. Description of Business .
Business Development
Eline Entertainment Group Inc, (the "Company" or "Issuer").was originally incorporated under the laws of the State of Nevada as Rapid Retrieval Systems, Inc. ("RRS") on June 12, 1997. In August of 2000, RRS merged with ELine Music.com in an exchange of shares. RRS was the surviving entity of the merger, but subsequently changed its name to ELine Music.com, Inc. On September 14, 2001 Eline Music.com changed it's name to Eline Entertainment Group Inc. The Company has no subsidiaries or affiliated companies.
Business of Issuer
ELine Entertainment Group was established as a full service entertainment company to produce music, develop film & video productions for retail, theatrical, radio, Internet, television and cable broadcasting distribution networks.
The Company has successfully established and continues to produce several radio, television and Internet productions. The internet radio talk show "All About This" featuring Tony Del Vecchio, located at www.elinemusicradio.com is formatted for cable radio / television and is currently one of the feature talk shows in the internet community. The talk show can be listened to daily along with access to past shows in the archive database. A weekly "All About This" TV show is currently in development status with pilot shows available for viewing on the Internet. A spring 2002 demo reel of "All About This" has been produced along with artwork and is available to download as mp3 files.
ELine Entertainment Group has established and continues to develop Vidbox ( www.vidbox.net ) which is an interactive music video web site. Vidbox delivers high quality music videos on-demand. Music Videos from major and independent record labels are featured along with exclusive backstage interviews and concert footage. A Vidbox weekly television show is currently in pre-production and is planned to be in the production stage by the Company's fourth quarter 2002.
Wedding video production work has been developed to generate operational income and separate the Company from traditional dot.com financial philosophies. Magic Moments Video Productions ( www.elineentertainment.com/magicmoments ) operates out of the Stroudsburg, PA office and serves the Pocono, Lehigh Valley and Northwest New Jersey regions along with offering a variety of wedding video packages.
ELine Entertainment has found an increasing demand for the production work of commercials, corporate videos, music videos and electronic press kits ( www.elineentertainment.com/epk ). Marketing strategies are under development to establish ELine Entertainment Group as an elite source for film and video production.
The Company has established an independent record label named Street Flavor International Records. The label's first project, which features a group named "The Burnaz", has a release date of March 18, 2002. The dynamic rap group has samples of their music available at www.theburnaz. net. ELine Entertainment is reviewing multiple country, rap and rock music projects for production, and plans additional releases in the third and fourth quarters of 2002.
ELine Entertainment Group has continued to develop www.elinemusic.com , which was created to fill a void that currently exists in the entertainment/music business. Major labels, of which there are only five (5) or six (6), control about ninety-five percent (95%) of the industry. Independent artists and labels ('independents'), which are not part of the major labels, do not have a unified vehicle for the professional presentation of their work or an outlet for sales of their creations. These independents must currently work through fragmented channels, which do not have a significant impact on the industry. As a result, the music of the independents do not get adequate exposure to the consuming public. Additionally, the consumers have limited opportunity to purchase this music.
Formed as an Internet company designed to fit the needs of these independents, the Company's Web-Site Network provides the needed outlet where labels and artists can showcase and sell their music. Through the recruitment of independents, revenues are expected to be generated from artists through the sales of services, such as production and/or airing of music videos, website creation and electronic press kits. Consumer sales will consist of downloaded music (individual songs or full albums) from the Company's website, hard copy sales of CD's and other related consumer products, such as event tickets. Because of the company's contractual financial agreements with the intellectual property owners of all music on the Website, there will be few, if any of the difficulties encountered by other music Internet companies.
As the Company grows, advertising revenues are expected to become an increasingly significant revenue stream. Advertising will be offered through E Line Music Radio, E Line Music TV and other related areas, such as peer-to-peer chat rooms, celebrity chat rooms and banner presentations. The traffic generated through the website is intended to create a natural avenue for targeted demographic advertisers. The Company intends to solicit major and independent labels to advertise on the website to showcase talent through streaming music videos, celebrity interviews, events calendars, etc.
OTHER BUSINESS RELATED MATTERS
ELine Entertainment Group entered into an agreement on October 12, 2001 with IBIZ Technology who, through its state-of-the-art center and WEB-hosting facility, was to help develop and host the Vidbox site (www.vidbox.net), deliver Vidbox content and provide all hardware, technical support staff and facilities required to stream music videos to a worldwide audience. IBIZ was unable to satisfy the agreement due to economic problems and the termination of their co-location center. Both parties agreed to mutually terminate the agreement.
WEB Pay-Per-View, Inc. entered into a joint agreement with ELine Entertainment Group on June 4, 2001 to co-promote live music concerts of national artist and bands. Computer viewers were to use a 24-hour pay-per-view cyber ticketing system. WEB Pay-Per-View was unable to full-fill it's obligations on the joint venture due to inadequate funding. Both parties agreed to set aside the venture until such time as WPPV can secure funding to continue forward.
On April 25,2001 ELinemusic.com entered into an agreement to acquire Soniquest Studios located in Winter park, FL. ELinemusic.com was unable to satisfy it's obligations because of a lack of funding and therefore had no choice but to resend the deal with SoniQuest.
ELinemusic.com finalized a formal contract to acquire Thology Production Group, Inc. on April 15, 2001.
Although the agreement was finalized, due to disclosures to ELinemusic.com from International Digital Holding (IDIG) and much due deligence on the part of ELine, it became evident to ELine that there were many existing problems emanating from the board of directors and affiliated companies of IDIG. What appeared to be the major problem was the non-disclosure of existing problems between IDIG and VME, which owns the Hard & Heavy licensing for the content of RockThology. In a good faith effort ELine paid $45,000 to VME and guaranteed an additional $45,000 to keep the licensing agreement in whole which would allow ELine to seek distribution for the RockThology / Hard & Heavy project. After many hours of negotiations ELine was successful in partially completing a distribution agreement with Prime Entertainment, while keeping in compliance with the terms of agreements with VME and IDIG. ELine, however, was unsuccessful in keeping the IDIG RockThology / Hard & Heavy and Prime Entertainment deal together because of interference from a member of IDIG's board of directors who acted for his own gain and released confidential documents and inside information to Prime Entertainment thus preventing ELine from moving forward to make a fair and equitable deal with all parties mentioned above.
PRODUCTS AND SERVICES
Descriptions
The Company's Web-Site Network, as it stands today, is the product of an investment of approximately $605,000. Because much of the technological work on the website was managed and monitored by the Company, the true value to reproduce this website may be much greater and may reflect a substantial cost savings.
From the Website, all products can be purchased and all services viewed. Of significance is the fact that either single songs, entire albums or customized albums may be purchased. Product purchases can be made through all traditional means, as well as through a uniquely designed prepaid credit card that will cater to adolescents and younger consumers. At present, the website includes links to the categories of Music, Videos, Chat, Label/Artist (sign up) and Eline Radio. Eline Music TV is in the process of being added. (Specifics of these website connections are discussed below.) Website development has been and will continue to be a work-in-progress. It will continually be enhanced to maintain its state-of-the-art leadership capability, as well as to accommodate new products and services to be offered.
The Web-Site Network is positioned as a "one stop" source for all the music needs of both the consumer and artist. As such, the website offers a variety of products and services designed to fill those needs. For the independent artist/label, the following needs are met:
1. outlet for music sales
2. cost effective advertising medium
3. video production/showcase
4. recording studio services and production
5. consulting
For the consumer, the Website provides:
1.ability to purchase single songs/albums/customized albums--downloaded or hard copy
2. exposure to new artists on an international level
3. opportunity to "chat" with artists
4. event ticket sales
5. streaming videos of events/concerts
6. television programming
Independents, who are not connected with a major record label, now have an opportunity to generate revenue through the sales of their music. The Company can upload music to the Website, supplied by the independent, and immediately begin selling. The contracts with independents state that all product sales are split equally between E Line and the independent. For a fee, E Line will also provide recording studio production services. Independents can also advertise through various ways on the Website. For example, the Company can, on a fee basis, provide an individualized website, video production and/or display of an Electronic Press Kit, music video production and /or display, and feature presentation in a "chat" room, and special event advertising.
Consumers will be able to purchase music not readily available through traditional outlets, since many of independent artists have previously had no method by which their music could be heard or purchased. Sales can be generated through single song purchases, whole albums or a combination of songs. In addition to concert ticket sales, other targeted (demographically) consumer products are intended to be offered.
Product/Service Costing
Product costing is structured to yield approximately a fifty percent (50%) gross margin. For the sales of CD's, the financial arrangement with labels/artists provides that they will receive one-half of all music sales, downloaded or hard copy. The feasibility of this arrangement is based on the fact that, once having the infrastructure of the website in place, there are no incremental costs for the sale of a CD album or single song which is downloaded. For hard copies, incremental costs are included in the additional sales charge of $3.00 per CD, plus shipping and handling. Other consumer product sales, as they are developed and offered, are expected to be priced to yield similar margins.
Service revenues are anticipated to yield a the same or greater gross margins. These services will be offered on a fee basis, and will vary with the level of service. The studio facilities, similar to the website, represent an infrastructure that is already in place and not expected to need additional costs to service. If necessary, pricing for services will need to account for the appropriate margin on other incremental costs incurred.
Competitors' Offerings
In the short history of the E-commerce industry, Internet entertainment/music companies have proliferated, failed and in some cases succeeded. As such, the changing landscape of competition often makes it difficult to identify competitive companies. The Company has made a comparative analysis of itself to the competitive environment (as of September, 2000) by using the most desirable attributes that a website can offer. Based on this analysis, the Company believes that it is well positioned to compete successfully in the industry.
MARKET ANALYSIS
The most developed and predominant market for the internet is in North America. Initially, this is where E Line will concentrate its market efforts, specifically in the United States.
The dominant technology that is used for music Internet sites is Mp3. Almost all Internet music websites, including E Line Music, utilize this technology. It downloads compressed music files while maintaining high quality sound. As a result, the average consumer, without sophisticated computer equipment, can take full advantage of quality music downloads. The focus of our market is the average consumer in the Mp3 arena.
The prime target market at which E Line will focus its promotional efforts will be those age sixteen (16) to thirty-five (35). This represents approximately sixty five (65) million users. This group is familiar with Mp3 technology and represents motivated purchasers. A part of the strategy is to attract the thirty (30) plus million US Internet users who have yet to visit Mp3 websites.
The market outside of North America is substantial and will become a secondary focus, after concentration on the United States and Canada.
Reports to Security Holders
The Company will provide an annual report to its Security Holders on Form 10-KSB, which includes audited financial statements, which is filed with the Securities and Exchange Commission. The public may read and copy any materials filed with the SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. The Public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC and the address of that website is www.sec.gov .
Item 2. Description of Property .
The Company operates its headquarters from building facilities located at 14919 Lebanon Road, Old Hickory, Tennessee 37138. The entire building is approximately eight thousand (8,000) square feet and the Company occupies approximately twenty two hundred (2200) square feet of which one half of this area is dedicated to a state of the art recording studio. The recording studio will be used to provide a service to artists and labels in need of such services, at a fee. During periods of low usage, the studio may be rented out as a supplemental source of revenue. The remainder of the facility is used for administrative purposes. The building is rented under a lease agreement. The lease period is seven years, (7) beginning from May,25, 2001 and ending on June 1, 2007.
The Company does not currently have any interests relating to investments in real estate, interest in real estate or real estate mortgages.
Item 3. Legal Proceedings .
The Company has been named in a lawsuit filed October 23, 2001, in Bergen County, New Jersey. The suit seeks damages of approximately $95,000 for breach of a lease agreement. Management continues to investigate the merits of this claim but does not believe that settlement of this claim, if any, will have a material effect on the financial statements. The Company is not a party to any other pending legal proceeding.
Item 4. Submission of Matters to a Vote of Security Holders .
A Special Shareholders Meeting was held on September 14, 2001. Submitted for a vote was the matter of changing the corporation's name to Eline Entertainment Group, Inc. At the date of the meeting, the Company had issued and outstanding 2,940,169 shares of common stock. 2,891,000 shares voted in favor of the name change; no shares were opposed and none abstained.
PART II
Item 5. Market for Common Equity and Related Stockholders Matters .
The Company's common stock is traded on the OTC Bulletin Board. The stock is not as liquid as the stock of other companies that are on traded on the NASDAQ because of trading on the OTCBB. Additionally, of the four million one hundred fifty three thousand six hundred sixty seven (4,153,667) shares outstanding, there are one million six hundred twenty-one thousand and five (1,621,005) free trading shares and two million five hundred thirty two thousand and six hundred soxty two (2,532,662) shares that are restricted The number of holders of record of common stock as of October 31, 2001 is two hundred twenty eight (228).
The following table sets forth the high and low closing price for the Company's common stock, in U.S. Dollars, by NASDAQ during each quarter since the stock was traded.
Quarter Ended . . . . . . . . . . . . . . . . . . High . . . . . . . . . .Low
July 31, 2000. . . . . . . . . . . . . . . . . . . . 2.50. . . . . . . . . . .2.50
October 31, 2000. . . . . . . . . . . . . . . . . 3.00. . . . . . . . . . .2.50
January 31, 2001. . . . . . . . . . . . . . . . . 2.50. . . . . . . . . . .2.50
April 30, 2001. . . . . . . . . . . . . . . . . . . 1.50 . . . . . . . . . . 1.45
July 31, 2001. . . . . . . . . . . . . . . . . . . 1.01. . . . . . . . . . 1.01
October 31, 2001. . . . . . . . . . . . . . . . 1.24. . . . . . . . . . 1.24
The Company has not paid or declared any dividends in its common stock and does not anticipate paying any dividends in the foreseeable future.
Item 6. Management's Discussion and Analysis/Plan of Operation .
Marketing Strategy And Plan
The marketing strategy is to promote the Website through a multi-media and multi-targeted approach. The Company will utilize print, broadcast media, direct consumer and Internet marketing. The marketing will also be supported by a media relation's strategy. The fundamental objective of the Company's campaign is to establish E Line Music.com as the premier Internet music website for both artists and consumers.
Initially, advertising and promotional efforts will be directed exclusively toward attracting independent artists and labels, for two reasons. Firstly, there is the need to build an inventory of music to sell to consumers. Secondly, the Company anticipates that the independents will purchase services annually averaging one thousand dollars ($1,000), representing an immediate source of revenue. Consumer directed promotion would not start until approximately six months thereafter.
Specific marketing objectives are initially established as:
1. Create awareness within independent artists/label community
2. Create brand awareness among consumers
3. Sell directly to the on-line consumer market
4. Derive market research from marketing initiatives
Broadcast Media
Advertising in this media will be through demographically targeted radio and television stations. The company intends to promote the Website in both major and intermediate markets through a quality theme and consistent message.
Print Media
Print media is intended to include magazines, newspapers and trade publications. Magazine advertising will focus on the music buying public, as well as some general readership periodicals. Promotion of the Website in newspapers will be in major and intermediate markets. The messages in trade publications will be directed at the independent artists and labels.
Direct consumer
This form of advertising will directly target specific consumer groups. The Company is considering direct on-location promotions at college and high school venues, as well as some direct mailings.
On-Line Internet Advertising
The on-line advertising will be segmented into two (2) basic areas. The first is to drive consumer traffic to the Company's Website through banner ads and portal sponsorships. This part of the strategy focuses on advertising with a well-known search engine such as Yahoo!, About.com and MSN. The concept is to create a "sales spiral" that starts with "page impressions," moves to "Website visits" (or "click throughs"), culminating in sales.
The second part of the on-line plan is through a "keyword" approach. E line will initiate short-term keyword banner campaigns that target the Company's prime consumers. The main goal of this keyword component is to generate accurate market data about the Company's target markets. A budget for this portion is not included at this time, but the Company expects to adopt one within one (1) year.
Summary
As of October 31, 2001, the Company had accumulated a deficit during its development stage of $5,503,832. For the year ended October 31, 2001, the Company had revenues of $17,861 and incurred a net loss of $2,956,651, compared to a net loss of $2,565,042 for the year ended October 31, 2000. No revenues were recorded during the year ended October 31, 2000. The increase in revenues is attributable to studio rental income. The increase in the net loss was due primarily to a 419% increase in operating expenses of $1,536,899 compared to operating expenses of $295,989 at October 31, 2000. The increase is attributable to a non cash consulting agreement with an officer and shareholder and other increases primarily salaries, professional fees and web site development.
Cash used in operating activities was $546,134 for the year ended October 31, 2001 compared to $747,593 for the year ended October 31, 2000. Although losses for the year ended October 31, 2001 were $391,609 greater than for the year ended October 31, 2000, approximately $2,000,000 of these losses were for non cash charges resulting from the issuance of Common Stock for services and amortization of unearned consulting fees. Operating and investing activities were primarily funded by borrowings from stockholders of $211,174 and sales of common stock of $271,520 during the year ended October 31, 2001 as compared to borrowings from stockholders of $435,200 and sales of common stock of $709,000 for the year ended October 31, 2000.
Liquidity and Capital Resources
As of October 31, 2001, the Company had insufficient cash and working capital to fund operations during the next year. In order to satisfy the cash needs of the Company for the following twelve months and to satisfactorily implement the business plan, the Company will be primarily dependent upon proceeds from the sale of the Company's common and/or preferred stock and other debt financing. If the Company is unable to obtain adequate funds from the sale of its stock in public offerings, private placements, or alternative financing arrangements, it may be necessary to postpone implementation of the business plan and suspend current operating transactions.
Effective May 29, 2001, the Company declared a one for twenty reverse Common Stock split. The purpose of the split is intended to help the Company in its financing activities. The financial statements contained herein reflect the split both currently and retroactively. Additionally, the Company has issued shares of its Common Stock from time to time in the past to satisfy certain obligations and expects in the future to also acquire certain services, satisfy indebtedness and/or make acquisitions utilizing authorized shares of the capital stock of the Company. If operations and cash flow can be improved through these efforts, management believes that the Company's liquidity problems will be resolved and that the Company can continue to operate. However, no assurance can be given that management's actions will result in profitable operations.
The Company has issued shares of its Common Stock from time to time in the past to satisfy certain obligations and expects in the future to also acquire certain services, satisfy indebtedness and/or make acquisitions utilizing authorized shares of the capital stock of the Company. If operations and cash flow can be improved through these efforts, management believes that the Company's liquidity problems will be resolved and that the Company can continue to operate. However, no assurance can be given that management's actions will result in profitable operations.
Plan of Operation
The plan for operating the company will revolve around the utilization of the key management personnel, increasing support staff as the company grows and, where practical, acquiring the management of in-house technology. The current management and their primary responsibilities are described below. As the Company enters its next stage of growth, there are plans to increase the staff in support of such growth. In addition to administrative personnel, the next key position to fill will be a Sr. Vice President of Marketing and Sales, who will direct the Marketing Strategy to accomplish the objectives of that plan.
The importance of Marketing and Sales is critical to generate revenues through the sales of products and services. However, of initial primary importance is the recruitment of talent and new independent artists and labels. There are dedicated resources assisting the Company in successfully implementing this part of the operations. The Company believes the management team in place, and as planned, possesses the expertise and knowledge to carry out the strategic goals.
Technological aspects are an important part of the strategy, and are the responsibility of the Company's management. E Line currently has a close, contractual relationship with Creative Network, Inc (CNI). CNI is a dedicated vendor to the Company. Its computer related expertise created, maintains and services the website. In its vendor role, CNI will upload new artist music to the Website, create and implement enhancements, and physically house the Server and other computer related equipment. The Company intends to acquire CNI for three hundred and seventy five thousand dollars ($375,000), subject to financing and negotiations with CNI for payment of stock for some or all of the purchase price.
Item 7. Financial Statements .
Included herewith are the audited financial statements for the period ending October 31, 2001.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors
Eline Entertainment Group, Inc.
Old Hickory, Tennessee
We have audited the accompanying balance sheet of Eline Entertainment Group, Inc. as of October 31, 2001, and the related statements of operations, changes in stockholders' deficit, and cash flows for the year then ended. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the 2001 financial statements referred to above present fairly, in all material respects, the financial position of Eline Entertainment Group, Inc. as of October 31, 2001, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
As discussed in Note 3 to the financial statements, the Company is a development stage company with insufficient revenues to fund development and operating expenses. This condition raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 3. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.
RODEFER, MOSS & CO., PLLC
Knoxville, Tennessee
February 22, 2002
ELINE ENTERTAINMENT GROUP, INC.
(A Development Stage Company)
Balance Sheet
October 31, 2001
ASSETS
Current Asset
Cash
$
688
Property, equipment and leasehold improvements, net
247,712
Web site, net
74,335
$
322,735
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Bank overdraft
$
1,378
Accounts payable
220,316
Accrued expenses
95,924
Advance from distributor
94,527
Notes payable - stockholders
308,388
Note payable - consultant
100,000
Current portion of capital lease obligations
22,276
Total Current Liabilities
842,809
Notes payable ' stockholders
160,500
Capital lease obligations, net of current portion
52,291
Total Liabilities
1,055,600
STOCKHOLDERS' DEFICIT
Preferred stock, $.001 par value; 5,000,000 shares
Authorized, none issued
Common stock, $.02 par value; 100,000,000 shares
Authorized; 4,153,667 issued or to be issued
83,073
Additional paid-in capital
11,684,319
Unearned consulting fees and compensation
(6,996,425)
Deficit accumulated during the development stage
(5,503,832)
Total Stockholders' Deficit
(732,865)
$
322,735
The accompanying notes are an integral part of these financial statements.
F-1
ELINE ENTERTAINMENT GROUP, INC.
(A Development Stage Company)
Statements of Operations
Years Ended October 31, 2001 and 2000 and the
Period from November 2, 1999
(Date of Inception) to
October 31, 2001
Year Ended 2001
Year Ended 2000
Period From November 2, 1999 to October 31, 2001
Studio rental income
$
17,861
$
--
$
17,861
Operating expenses
1,536,899
295,989
1,832,888
Web site maintenance
244,794
165,793
410,587
Consulting fees
1,160,985
2,099,805
3,260,790
Interest expense
13,973
3,455
17,428
2,956,651
2,565,042
5,521,693
Net loss
$
(2,938,790)
$
(2,565,042)
$
(5,503,832)
Basic and diluted loss per share
$
(1.94)
$
(4.87)
$
(5.41)
Weighted average
Shares outstanding
1,513,429
527,066
1,018,135
The accompanying notes are an integral part of these financial statements
F-2
ELINE ENTERTAINMENT GROUP, INC.
(A Development Stage Company)
Statements of Changes in Stockholders' Defecit
Years Ended October 31, 2001 and 2000 and the
Period from November 2, 1999 (Date of Inception)
To October 31, 2001
Common Stock
Shares
Amount
Additional Paid-in Capital
Unearned Consulting Fees and Compensation
Deficit Accumulated During the Development Stage
Total
Initial capitalization of Company
500,000
$
10,000
$
(10,000)
$
--
$
--
$
--
Effects of reverse acquisition
16,250
325
168,575
168,900
Common stock sold through
private placement
4,000
80
159,920
160,000
Common stock to be issued
14,725
589,000
589,000
Common stock issued to
consultants
40,000
800
1,599,200
1,600,000
Net loss
(2,565,042)
(2,565,042)
Balance, October 31, 2000
574,975
11,205
2,506,695
--
(2,565,042)
(47,142
Common stock sold through
private placement - March
through May, 2001
6,788
136
271,384
271,520
Issuance of subscribed shares -
March and April 2001
294
(294)
--
Common stock issued to
consultants - March through
August 2001
1,621,904
32,438
3,085,534
(2,452,500)
665,472
Common stock issued to officer
and shareholder - June 2001
1,950,000
39,000
5,232,500
(5,362,500)
--
Stock options issued
497,500
(497,500)
--
Amortization of unearned
consulting fees &
compensation
1,316,075
1,316,075
Net loss
(2,938,790)
(2,938,790)
Balance, October 31, 2001
4,153,667
$
83,073
$
11,684,319
$
(6,996,425)
$
(5,503,832)
$
(732,865)
The accompanying notes are an integral part of these financial statements.
F-3
ELINE ENTERTAINMENT GROUP, INC.
(A Development Stage Company)
Statements of Cash Flows
Years Ended October 31, 2001 and 2000 and the
Period from November 2, 1999 (Date of Inception)
To October 31, 2001
2001
2000
Period From November 2, 1999 to October 31, 2001
Operating Activities
Net loss
$
(2,938,790)
$
(2,565,042)
$
(5,503,832)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization
95,498
36,708
132,206
Amortization of unearned consulting fees and
compensation
1,316,075
--
1,316,075
Note payable issued for consulting fees
--
100,000
100,000
Forfeiture of deposit on building
50,000
--
50,000
Common stock issued and to be issued for consulting
fees and options
665,472
1,640,000
2,305,472
Changes in operating liabilities: Accounting payable
199,101
11,327
210,428
Accrued expenses
66,510
29,414
95,924
Net Cash used in Operating Activities
(546,134)
(747,593)
(1,293,727)
Investing Activities:
Web site design expenditure
--
(94,896)
(94,896)
Deposit on building
--
(50,000)
(50,000)
Purchase of property and equipment
(13,116)
(259,533)
(272,649)
Net Cash Used in Investing Activities
(13,116)
(404,429)
(417,545)
Financing Activities:
Proceeds from borrowings from stockholders
211,174
435,200
646,374
Advance from distributor
94,527
--
94,527
Cash received in reverse acquisition
--
1,302
1,302
Sale of common stock
271,520
709,000
980,520
Cash overdraft
(6,561)
7,939
1,378
Payments on capital lease obligations
(11,410)
(731)
(12,141)
Net Cash Provided by Financing Activities
559,250
1,152,710
1,711,960
Increase in Cash
0
688
688
Cash, beginning of period
688
--
--
Cash, end of period
$
688
$
688
$
688
The accompanying notes are an integral part of these financial statements.
F-4
ELINE ENTERTAINMENT GROUP, INC.
(A Development Stage Company)
Notes to Financial Statements
October 31, 2001
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Nature of Operations Eline Entertainment Group, Inc. ("Eline") is a development stage entertainment industry company formed on November 2, 1999 that maintains an Internet presence designed to fit the needs of independent artists and labels. Through October 31, 2001, Eline has not generated significant operating revenue but has focused primarily on raising capital, developing its web site and building a management team.
On August 15, 2000, Rapid Retrieval Systems, Inc. ("Rapid"), an inactive publicly-held company, acquired Eline by issuing 500,000 shares of its common stock to the stockholders of Eline in exchange for all of the outstanding shares of Eline . As part of the transaction, officers and directors of Rapid received $250,000 in consulting fees which were expensed. The stockholders of Eline (legal acquiree), after the acquisition, owned the majority of the combined company. Accordingly, the combination has been accounted for as a reverse acquisition whereby, for accounting purposes, Eline is the acquirer and Rapid is the acquiree. In connection with the acquisition, Rapid, which is the surviving legal entity, changed its name to Eline Entertainment Group, Inc.
The financial statements of Eline and Rapid (collectively, the "Company") are the historical financial statements of Eline through August 15, 2000, the date of acquisition, at which time the assets and liabilities of Rapid were combined with those of Eline. Rapid's assets included cash of $1,302 and its liabilities included accounts payable of $9,888 and a balance due to a stockholder of $77,514. During the period from January 1, 2000 to August 15, 2000, the only period for which a statement of operations for Rapid is available, Rapid generated no revenue and incurred expenses and a net loss of approximately $30,000. Had the acquisition of Rapid occurred at Eline's inception, on a pro-forma basis, the Company's loss for the period from November 2, 1999 (date of inception of Eline) to October 31, 2000 would have been approximately $2,595,000 (unaudited), or $5.00 per share (unaudited).
Cash and Cash Equivalents The Company considers highly liquid investments with initial maturities of three months or less to be cash equivalents.
Use of estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
Stock Based Compensation The Company measures its equity transactions with non-employees using the fair value based method of accounting prescribed by Statement of Financial Accounting Standards No. 123 (SFAS 123), " Accounting for Stock-Based Compensation ." Under the provisions of SFAS 123, the Company recognizes as a cost or expense, the fair value of stock awards and options to non-employees at the date of grant. The Company continues to use the intrinsic value approach as prescribed by APB Opinion No. 25 in measuring equity transactions with employees.
Property, equipment and leasehold improvements Property, equipment and leasehold improvements are stated at cost, net of accumulated depreciation and amortization. Depreciation and amortization are computed by the Company using the straight-line method over the estimated useful lives of the related assets or their lease term which range from three to seven years.
Web site development costs The Company accounts for costs incurred in connection with the development of its web site in accordance with Statement of Position 98-1, "Accounting for Costs of Computer Software Developed or Obtained for Internal Use" and Emerging Issues Task Force Issue No. 00-2 "Accounting for Web Site Development Costs." Accordingly, all costs incurred in planning the development of a web site are expensed as incurred. Costs, other than general and administrative and overhead costs, incurred in the web site application and infrastructure development stage, which involve acquiring hardware and/or developing software to operate the web site, are capitalized. Fees paid to an Internet service provider for hosting the web site on its server(s) connected to the Internet are expensed. Other costs incurred during the operating stage, such as training, administration and maintenance costs, are expensed as incurred. Costs incurred during the operating stage for upgrades and enhancements of the web site are capitalized if it is probable that they will result in added functionality. Capitalized web site development costs are amortized on a straight-line basis over their estimated useful life of five years.
Impairment of long-lived assets The Company has adopted the provisions of Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of" ("SFAS 121"). Under SFAS 121, impairment losses on long-lived assets, such as property, equipment and leasehold improvements and web site development costs, are recognized when events or changes in circumstances indicate that the undiscounted cash flows estimated to be generated by such assets are less than their carrying value and, accordingly, all or a portion of such carrying value may not be recoverable. Impairment losses are then measured by comparing the fair value of the assets to their carrying amounts.
Income taxes The Company accounts for income taxes pursuant to the asset and liability method which requires deferred income tax assets and liabilities to be computed for temporary differences between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The income tax provision is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities.
Earnings (loss) per share The Company presents "basic" earnings (loss) per common share and, if applicable, "diluted" earnings per common share pursuant to the provisions of Statement of Financial Accounting Standards No. 128, Earnings per Share." Basic earnings (loss) per common share is calculated by dividing net income or loss applicable to common stock by the weighted average number of common shares outstanding during each period. For all periods presented all securities convertible into common shares were anti-dilutive.
Non-Cash Equity Transactions Goods and services acquired through the issuance of common stock are valued on the date of the transaction based on the closing bid price for the Company's common stock.
Note 2 - STATEMENT OF CASH FLOWS SUPPLEMENTAL DISCLOSURE
During the years ended October 31, 2001 and 2000, and for the period from November 2, 1999 (date of inception) to October 31, 2001, the Company paid $1,973, $1,154 and $ 3,127, respectively, in interest and paid no income taxes and the following transactions not affecting cash occurred:
The Company acquired $81,534, $5,174, $86,708 of equipment under capital leases during the years ended October 31, 2001 and 2000, and for the period from November 2, 1999 (date of inception) to October 31, 2001, respectively.
The Company converted a $255,000 note payable due to a stockholder into common stock during the year ended October 31, 2000.
Note 3- BUSINESS CONDITION
Going concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the accompanying financial statements, the Company incurred a cumulative net loss of $5,503,832 during the period from November 2, 1999 (date of inception) to October 31, 2001. In addition, as of October 31, 2000, the Company has a working capital deficiency of $520,074 and a stockholders' deficiency of $732,865. Although a substantial portion of the Company's net loss is attributable to noncash operating expenses, management believes it will need additional equity or debt financing to be able to sustain its operations until it can achieve profitability, if ever. These matters raise substantial doubt about the Company's ability to continue as a going concern.
Management believes that the commercial success and profitability of the Company will depend significantly on its ability to (i) attract and provide services to independent artists and labels, (ii) increase the number of visitors to its current web site, (iii) increase the name recognition of the Company, and (iv) increase the variety of unique products sold on its web site. Management is attempting to raise additional equity financing to sustain operations until it can market its services, expand its customer base and achieve profitability, if ever. The accompanying financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
Note 4 - PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Property, equipment and leasehold improvements consist of the following:
Equipment (including $86,708 under a capital lease) $
172,911
Furniture and Fixtures 10,169
Studio 26,353
Web site hardware 101,915
Leaseholder imrpovements 48,009
Total 359,357
Less accumulated depreciation and amortization (including $15,142 under a capital lease) 111,645
$
247,712
Depreciation and amortization expense for the years ended October 31, 2001 and 2000 was $95,498 and $36,708, respectively.
NOTE 5 - NOTES PAYABLE - STOCKHOLDERS
Notes payable - stockholders are comprised of the following:
Noninterest bearing notes payable to stockholders on demand $
308,388
Noninterest bearing note payable to stockholder on October 31, 2003 160,500
Total $
468,888
NOTE 6 - NOTE PAYABLE - CONSULTANT
At October 31, 2001 the Company had a $100,000 demand note payable to a company affiliated with one of the Company's stockholders for consulting services bearing interest at 10%. Interest expense related to this debt for the year ended October 31, 2001 was $10,000 and for the period from November 2, 1999 (date of inception) to October 31, 2001 was $11,989.
NOTE 7 - RELATED PARTY TRANSACTIONS
During the period from November 2, 1999 (date of inception) to October 31, 2000, the Company expensed approximately $45,000 related to publishing fees and miscellaneous other costs paid to a corporation partially owned by the majority stockholder of the Company.
NOTE 8 - CAPITAL LEASE OBLIGATIONS
The Company leases telephone, computer and studio equipment under capital leases which are summarized as follows:
Payable in monthly installments of $1,826, including interest through October 2005; collateralized by telephone, computer and studio equipment $
81,039
Less amount representing interest 6,472
Total 74,567
Less current portion 22,276
$
52,291
Principal payment requirements under the capital leases in years subsequent to October 31, 2001 are as follows:
Year Ending October 31,
Amount
2002
$
22,276
2003
18,251
2004
15,483
2005
16,060
2006
2,497
$
74,567
this debt for the year ended October 31, 2001 was $10,000 and for the period from November 2, 1999 (date of inception) to October 31, 2001 was $11,989.
NOTE 9 - COMMITMENTS AND CONTINGENCIES
The Company leases its facility under an operating lease that expired in May, 2001 with an option to renew for an additional eighteen months. The Company paid $50,000 for an option to purchase for $425,000 the building in which the Company occupies space. The option expired March 9, 2001 and the Company forfeited the $50,000. Rent expense for the years ended October 31, 2001 and 2000 was approximately $13,365 and $11,000, respectively, and $24,365 for the period from November 2, 1999 (inception) to October 31, 2001.
The Company has been named in a lawsuit filed October 23, 2001, in Bergen County, New Jersey. The suit seeks damages of approximately $95,000 for breach of a lease agreement. Management continues to investigate the merits of this claim but does not believe that settlement of this claim, if any, will have a material effect on the financial statements for the year ended October 31, 2001 or for the period from November 2, 1999 (inception) to October 31, 2001.
NOTE 10 - INCOME TAXES
As of October 31, 2001, the Company's only significant temporary differences were net operating loss carryforwards of approximately $5,385,125 available to reduce future Federal and state taxable income, These carryforwards begin expiring in 2019 through 2021. Due to the uncertainties related to the extent and timing of its future taxable income, the Company has offset the deferred tax assets attributable to the potential benefits of the net operating loss carryforwards of approximately $1,020,000 by an equivalent valuation allowance as of October 31, 2001.
The valuation allowance increased by $1,160,000, $1,020,000 and $2,180,000, respectively, for the years ended October 31, 2001, 2000 and for the period from November 2, 1999 (inception) to October 31, 2001.
A reconciliation of income tax benefit attributable to loss before cinome taxes differed from amounts computed by applying the United States of America federal income tax rate of 34% to loss before income taxes follows:
Year Ended 2001
Year Ended 2000
Period From November 2, 1999 to October 31, 2001
Computed expected income tax benefit $
986,000
$
867,000
$
1,853,000
State taxes
174,000
153,000
327,000
$
1,160,000
$
1,020,000
$
2,180,000
NOTE 11 - CAPITAL STRUCTURE AND COMMON STOCK
Preferred stock:
The Company's Articles of Incorporation authorize the issuance of up to 5,000,000 shares of preferred stock with a par value of $.001 per share. Any preferences accorded to preferred stock are to be determined by the Board of Directors upon issuance (See Note 12).
In March, 2001, the Company amended its articles of incorporation to increase authorization of the Company's $.02 par value common stock from 20,000,000 to 100,000,000 shares.
In May 2001, the Company declared a 20:1 reverse stock split on all of its outstanding shares of common stock. The reverse split has been retroactively applied to all periods presented herein.
Issuances of common stock:
In December 1999, the Company converted a note payable to a stockholder with a balance of $255,000 into 4,250 shares of common stock. Such shares were effectively issued on August 15, 2000 in connection with the reverse acquisition.
From January through March 2000, the Company initiated a private offering of common stock and issued 18,725 shares for $749,000 ($40/share). From November 2000 through December 2001, the Company completed a private offering of common stock and issued 6,788 shares for $271,520 ($40/share). Each unit consisted of one share of common stock and one A, B and C warrant exercisable at $100, $200 and $400, respectively. The warrants expire three years from the dates of grant.
In August and September 2000, the Company issued 40,000 shares of common stock with a fair value of $1,600,000 as payment for consulting services.
From November 2000 through October 2001, the Company issued 1,621,904 shares of common stock with a fair value of $3,085,534 as payment for consulting services. Of these costs, $665,472 was expensed immediately, and $2,452,500 in costs was for services to be delivered over terms of up to five years. Amortization of these prepaid costs in 2001 was $410,144, and the remaining balance included among "Unearned consulting fees and compensation" was $2,042,356.
In May 2001, the Company issued 1,950,000 shares of common stock with a fair value of $5,362,500 to an officer and stockholder as compensation for a consulting agreement expiring in May 2006. Included among "Unearned consulting fees and compensation" at October 31, 2001 was $4,954,068. The Company amortized approximately $408,432 of consulting fees related to this agreement during the year ended October 31, 2001.
Also in, 2001, the Company granted its then chief operating officer options to purchase up to 250,000 shares of the Company's common stock at an exercise price of $.01. These options also expire in ten years from the date of grant. Under the provisions of SFAS 123, the Company recognizes as a cost or expense, the fair value of stock awards and options to non-employees at the date of grant. Accordingly, the Company recognized expense of $497,500 associated with the grants during 2001.
Information regarding the options and warrants for 2001 and from November 2, 1999 (inception) to December 31, 2001 is as follows:
2001
Shares
Weighted Average Exercise Price
Options outstanding, beginning of year
25,575
$
233.33
Options canceled
-
N/A
Options exercised
-
N/A
Options granted
250,000
0.01
Options outstanding, end of year
275,575
21.66
Options exercisable, end of year
275,575
21.66
Option price range, end of year
$.01 to $400
Option price range for exercised shares
N/A
Options available for grant at end of year
0
Weighted average fair value of options granted during the year
N/A
No options were outstanding at the beginning of the period from inception to October 31, 2001, 275,575 options were granted during the period, and no options were canceled or exercised. Outstanding at the end of the period were 275,575 options with prices ranging from $.01 to $400 and weighted average exercise price of $21.66.
Note 12 - SUBSEQUENT EVENTS
On November 8, 2001 the Company issued 4,000,000 shares of Class A special preferred stock to an officer and stockholder. The Class A special preferred stock is to receive no preference in dividend distributions or in the event of liquidation. Each share of Class A special preferred stock receives five votes in stockholder voting matters. Dividend and redemption features are determinable at the sole discretion of the board of directors.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors
Eline Entertainment Group, Inc.
We have audited the accompanying statements of operations, changes in stockholders' deficit and cash flows for the period from November 2, 1999 (date of inception) to October 31, 2000. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, Eline Entertainment Group, Inc's, results of operations and cash flows for the period from November 2, 1999 (date of inception) to October 31, 2000, in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As further discussed in Note 3 to the financial statements, the Company's operations have generated no revenues and have incurred a net loss and it had a working capital deficit and a stockholders' deficit as of October 31, 2000. Such matters raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 3. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ J.H. COHN LLP
Roseland, New Jersey
January 15, 2001
J.H. Cohn, LLP authorizes use of this report in thie 2001 Form 10-KSB of ELine Entertainment Group, Inc. as of 2/28/02
Item 8. Changes in and Disagreements with Accountants .
Registrant's primary accountant, J. H. Cohn, LLC was dismissed on October 15, 2001. None of the principal accountants' report on the financial statements previously filed over the past two years contained an adverse opinion or disclaimer of opinion, or was modified as to uncertainty, audit scope, or accounting principles, disclaimer of opinion or modification. The report did include an explanatory paragraph regarding the company's ability to continue as a going concern. The decision to change accountants was approved by the Board of Directors. There were no disagreements with the former accountants on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure. On October 22, 2001, the Company engaged Roderfer Moss, LLC as its principal independent accountants. Prior to such engagement, the Company did not contact the accountant regarding any matter which would require disclosure in this item.
PART III
Item 9. Directors, Executive Officers, Promoters, and Control Persons .
The Members of the Board of Directors and Executive Officers are as follows:
Sonny Paradise
Chief Executive Officer and Chairman of the Board, age 28. Mr. Paradise has served as a Member of the Board since inception. Mr. Paradise has been in the music industry for more than ten (10) years. In the beginning of his career, he worked with Guy Vaughn, a famous writer and producer. As he developed music skills, he wrote and produced his first album in 1991 for singer Kristy Jones. Subsequent to that achievement, Mr. Paradise produced and wrote five (5) successful country albums. The first album received two nominations from the Country Music Independent Record Association for Album of the year and Male Vocalist of the year. Additionally, among the five (5) albums, there were four (4) top ten independent country hits and two (2) number one country hit songs. The successes achieved with these albums established Mr. Paradise as a fast rising music executives.
In 1993, Mr. Paradise reached another milestone in his career as an executive producer (with Trump Castle) of a nationally televised show titled "Country Quest USA". This show introduced, for the first time, a new way to distribute records via television, geared directly at the country music buying public. He is also responsible for bringing Rap music to a significant level in Nashville, Tennessee by signing two (2) relatively new artists, Pistol and Boogie to the major record labels of Ruthless Records and Relativity Music Group.
In 1995, Mr. Paradise was approached by Rick Wake, a world-renowned producer/writer and President of A&M owned DV8 Records, to help in running his organization. For a short time, he worked with Mr. Wake and was exposed to such big name artists as Celine Dion, Mariah Carey, The Bee Gees, and more. As head of Artists Relations, he was responsible for a Billboard number one hit, "Stand Up" by Love Tribes.
As CEO and Board Chairman, Mr. Paradise will oversee all executive decisions regarding the strategic direction of the Company and report regularly to the Board on such progress. He will also play a significant role with the creative aspects of the Company. He will direct the recruitment of talent, make evaluations of talent and create introductions and oversight to advertising and other alliances with different record labels, producers, etc.
On July 11, 2001 John P. Brancaccio resigned his position as President & COO of ELinemusic.com and took the position of Executive Vice President of Finance as a non-officer and as a non-director.
Anthony Fusolo
Anthony Fasulo, who has acted as an advisor and consultant to ELinemusic.com for two and a half years, became the acting president. Mr. Fasulo graduated from Rollins College in 1996 with a BA in Psychology and a minor in Business. Mr. Fasulo's background included extensive investment relations between brokerage firms and corporations. His knowledge and contacts made him a good candidate as the interim president of Elinemusic.com.
Kevin Grisham
Vice President/Production and Board Member, age 28. Mr. Grisham has served as Vice President and Board Member since inception. In his Production role, Mr. Grisham is responsible for the recruitment, development and evaluation of talent at the Company. He also works in the studio setting as an engineer and acts as a producer with certain artists. He is a well-known disc jockey, and has worked with such notables as Easy E, Above the Law, Bone Thugs and Harmony, Dr. Dre, and Rahiem and Scorpio of Grand Master Flash. In 1988, he won the DMC Mixing Championship at New York's Palladium.
Mr. Grisham will concentrate in the creative and talent development areas
Each Member of the Board of Directors will serve from the date of election until the next annual meeting.
Just discovered - ELNE (elinemusic.com)(.06)
Huge upside potential, IMO. Here's the whole filing:
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www.elinemusic.com/
Received date - Feb. 28, 2002
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C 20549
Form 10-KSB
Annual Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
For: Fiscal year ended October 31, 2001.
ELINE ENTERTAINMENT GROUP, INC.
(Exact name of small business issuer as specified in its charter)
Nevada
(State or other jurisdiction of incorporation or organization)
000-30451
(Commission File Number)
88-0429856
(I.R.S. Tax ID Number)
14919 Lebanon Rd., Old Hickory, TN 37138
(Address of Principal Executive Offices and Zip Code)
(615) 754-1871
(Issuer's telephone number)
ELine Music.com
14919 Lebanon Rd., Old Hickory, TN 37138
(Former name and former address)
(Mark One)
[X] Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended October 31, 2001.
[] Transition report under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from to
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Common
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No []
Check if there is no 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 registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [X]
Revenues for the year ended October 31, 2001 totaled $17,861.
Aggregate Market Value of Voting and Non-Voting Common equity held by non-affiliates: $66,307
Number of Shares Outstanding as of October 31, 2001: 4,153,667
Documents incorporated by reference:
Proxy Statement Filed on March 16, 2001: Part I, Item 4
PART I
Item 1. Description of Business .
Business Development
Eline Entertainment Group Inc, (the "Company" or "Issuer").was originally incorporated under the laws of the State of Nevada as Rapid Retrieval Systems, Inc. ("RRS") on June 12, 1997. In August of 2000, RRS merged with ELine Music.com in an exchange of shares. RRS was the surviving entity of the merger, but subsequently changed its name to ELine Music.com, Inc. On September 14, 2001 Eline Music.com changed it's name to Eline Entertainment Group Inc. The Company has no subsidiaries or affiliated companies.
Business of Issuer
ELine Entertainment Group was established as a full service entertainment company to produce music, develop film & video productions for retail, theatrical, radio, Internet, television and cable broadcasting distribution networks.
The Company has successfully established and continues to produce several radio, television and Internet productions. The internet radio talk show "All About This" featuring Tony Del Vecchio, located at www.elinemusicradio.com is formatted for cable radio / television and is currently one of the feature talk shows in the internet community. The talk show can be listened to daily along with access to past shows in the archive database. A weekly "All About This" TV show is currently in development status with pilot shows available for viewing on the Internet. A spring 2002 demo reel of "All About This" has been produced along with artwork and is available to download as mp3 files.
ELine Entertainment Group has established and continues to develop Vidbox ( www.vidbox.net ) which is an interactive music video web site. Vidbox delivers high quality music videos on-demand. Music Videos from major and independent record labels are featured along with exclusive backstage interviews and concert footage. A Vidbox weekly television show is currently in pre-production and is planned to be in the production stage by the Company's fourth quarter 2002.
Wedding video production work has been developed to generate operational income and separate the Company from traditional dot.com financial philosophies. Magic Moments Video Productions ( www.elineentertainment.com/magicmoments ) operates out of the Stroudsburg, PA office and serves the Pocono, Lehigh Valley and Northwest New Jersey regions along with offering a variety of wedding video packages.
ELine Entertainment has found an increasing demand for the production work of commercials, corporate videos, music videos and electronic press kits ( www.elineentertainment.com/epk ). Marketing strategies are under development to establish ELine Entertainment Group as an elite source for film and video production.
The Company has established an independent record label named Street Flavor International Records. The label's first project, which features a group named "The Burnaz", has a release date of March 18, 2002. The dynamic rap group has samples of their music available at www.theburnaz. net. ELine Entertainment is reviewing multiple country, rap and rock music projects for production, and plans additional releases in the third and fourth quarters of 2002.
ELine Entertainment Group has continued to develop www.elinemusic.com , which was created to fill a void that currently exists in the entertainment/music business. Major labels, of which there are only five (5) or six (6), control about ninety-five percent (95%) of the industry. Independent artists and labels ('independents'), which are not part of the major labels, do not have a unified vehicle for the professional presentation of their work or an outlet for sales of their creations. These independents must currently work through fragmented channels, which do not have a significant impact on the industry. As a result, the music of the independents do not get adequate exposure to the consuming public. Additionally, the consumers have limited opportunity to purchase this music.
Formed as an Internet company designed to fit the needs of these independents, the Company's Web-Site Network provides the needed outlet where labels and artists can showcase and sell their music. Through the recruitment of independents, revenues are expected to be generated from artists through the sales of services, such as production and/or airing of music videos, website creation and electronic press kits. Consumer sales will consist of downloaded music (individual songs or full albums) from the Company's website, hard copy sales of CD's and other related consumer products, such as event tickets. Because of the company's contractual financial agreements with the intellectual property owners of all music on the Website, there will be few, if any of the difficulties encountered by other music Internet companies.
As the Company grows, advertising revenues are expected to become an increasingly significant revenue stream. Advertising will be offered through E Line Music Radio, E Line Music TV and other related areas, such as peer-to-peer chat rooms, celebrity chat rooms and banner presentations. The traffic generated through the website is intended to create a natural avenue for targeted demographic advertisers. The Company intends to solicit major and independent labels to advertise on the website to showcase talent through streaming music videos, celebrity interviews, events calendars, etc.
OTHER BUSINESS RELATED MATTERS
ELine Entertainment Group entered into an agreement on October 12, 2001 with IBIZ Technology who, through its state-of-the-art center and WEB-hosting facility, was to help develop and host the Vidbox site (www.vidbox.net), deliver Vidbox content and provide all hardware, technical support staff and facilities required to stream music videos to a worldwide audience. IBIZ was unable to satisfy the agreement due to economic problems and the termination of their co-location center. Both parties agreed to mutually terminate the agreement.
WEB Pay-Per-View, Inc. entered into a joint agreement with ELine Entertainment Group on June 4, 2001 to co-promote live music concerts of national artist and bands. Computer viewers were to use a 24-hour pay-per-view cyber ticketing system. WEB Pay-Per-View was unable to full-fill it's obligations on the joint venture due to inadequate funding. Both parties agreed to set aside the venture until such time as WPPV can secure funding to continue forward.
On April 25,2001 ELinemusic.com entered into an agreement to acquire Soniquest Studios located in Winter park, FL. ELinemusic.com was unable to satisfy it's obligations because of a lack of funding and therefore had no choice but to resend the deal with SoniQuest.
ELinemusic.com finalized a formal contract to acquire Thology Production Group, Inc. on April 15, 2001.
Although the agreement was finalized, due to disclosures to ELinemusic.com from International Digital Holding (IDIG) and much due deligence on the part of ELine, it became evident to ELine that there were many existing problems emanating from the board of directors and affiliated companies of IDIG. What appeared to be the major problem was the non-disclosure of existing problems between IDIG and VME, which owns the Hard & Heavy licensing for the content of RockThology. In a good faith effort ELine paid $45,000 to VME and guaranteed an additional $45,000 to keep the licensing agreement in whole which would allow ELine to seek distribution for the RockThology / Hard & Heavy project. After many hours of negotiations ELine was successful in partially completing a distribution agreement with Prime Entertainment, while keeping in compliance with the terms of agreements with VME and IDIG. ELine, however, was unsuccessful in keeping the IDIG RockThology / Hard & Heavy and Prime Entertainment deal together because of interference from a member of IDIG's board of directors who acted for his own gain and released confidential documents and inside information to Prime Entertainment thus preventing ELine from moving forward to make a fair and equitable deal with all parties mentioned above.
PRODUCTS AND SERVICES
Descriptions
The Company's Web-Site Network, as it stands today, is the product of an investment of approximately $605,000. Because much of the technological work on the website was managed and monitored by the Company, the true value to reproduce this website may be much greater and may reflect a substantial cost savings.
From the Website, all products can be purchased and all services viewed. Of significance is the fact that either single songs, entire albums or customized albums may be purchased. Product purchases can be made through all traditional means, as well as through a uniquely designed prepaid credit card that will cater to adolescents and younger consumers. At present, the website includes links to the categories of Music, Videos, Chat, Label/Artist (sign up) and Eline Radio. Eline Music TV is in the process of being added. (Specifics of these website connections are discussed below.) Website development has been and will continue to be a work-in-progress. It will continually be enhanced to maintain its state-of-the-art leadership capability, as well as to accommodate new products and services to be offered.
The Web-Site Network is positioned as a "one stop" source for all the music needs of both the consumer and artist. As such, the website offers a variety of products and services designed to fill those needs. For the independent artist/label, the following needs are met:
1. outlet for music sales
2. cost effective advertising medium
3. video production/showcase
4. recording studio services and production
5. consulting
For the consumer, the Website provides:
1.ability to purchase single songs/albums/customized albums--downloaded or hard copy
2. exposure to new artists on an international level
3. opportunity to "chat" with artists
4. event ticket sales
5. streaming videos of events/concerts
6. television programming
Independents, who are not connected with a major record label, now have an opportunity to generate revenue through the sales of their music. The Company can upload music to the Website, supplied by the independent, and immediately begin selling. The contracts with independents state that all product sales are split equally between E Line and the independent. For a fee, E Line will also provide recording studio production services. Independents can also advertise through various ways on the Website. For example, the Company can, on a fee basis, provide an individualized website, video production and/or display of an Electronic Press Kit, music video production and /or display, and feature presentation in a "chat" room, and special event advertising.
Consumers will be able to purchase music not readily available through traditional outlets, since many of independent artists have previously had no method by which their music could be heard or purchased. Sales can be generated through single song purchases, whole albums or a combination of songs. In addition to concert ticket sales, other targeted (demographically) consumer products are intended to be offered.
Product/Service Costing
Product costing is structured to yield approximately a fifty percent (50%) gross margin. For the sales of CD's, the financial arrangement with labels/artists provides that they will receive one-half of all music sales, downloaded or hard copy. The feasibility of this arrangement is based on the fact that, once having the infrastructure of the website in place, there are no incremental costs for the sale of a CD album or single song which is downloaded. For hard copies, incremental costs are included in the additional sales charge of $3.00 per CD, plus shipping and handling. Other consumer product sales, as they are developed and offered, are expected to be priced to yield similar margins.
Service revenues are anticipated to yield a the same or greater gross margins. These services will be offered on a fee basis, and will vary with the level of service. The studio facilities, similar to the website, represent an infrastructure that is already in place and not expected to need additional costs to service. If necessary, pricing for services will need to account for the appropriate margin on other incremental costs incurred.
Competitors' Offerings
In the short history of the E-commerce industry, Internet entertainment/music companies have proliferated, failed and in some cases succeeded. As such, the changing landscape of competition often makes it difficult to identify competitive companies. The Company has made a comparative analysis of itself to the competitive environment (as of September, 2000) by using the most desirable attributes that a website can offer. Based on this analysis, the Company believes that it is well positioned to compete successfully in the industry.
MARKET ANALYSIS
The most developed and predominant market for the internet is in North America. Initially, this is where E Line will concentrate its market efforts, specifically in the United States.
The dominant technology that is used for music Internet sites is Mp3. Almost all Internet music websites, including E Line Music, utilize this technology. It downloads compressed music files while maintaining high quality sound. As a result, the average consumer, without sophisticated computer equipment, can take full advantage of quality music downloads. The focus of our market is the average consumer in the Mp3 arena.
The prime target market at which E Line will focus its promotional efforts will be those age sixteen (16) to thirty-five (35). This represents approximately sixty five (65) million users. This group is familiar with Mp3 technology and represents motivated purchasers. A part of the strategy is to attract the thirty (30) plus million US Internet users who have yet to visit Mp3 websites.
The market outside of North America is substantial and will become a secondary focus, after concentration on the United States and Canada.
Reports to Security Holders
The Company will provide an annual report to its Security Holders on Form 10-KSB, which includes audited financial statements, which is filed with the Securities and Exchange Commission. The public may read and copy any materials filed with the SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. The Public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC and the address of that website is www.sec.gov .
Item 2. Description of Property .
The Company operates its headquarters from building facilities located at 14919 Lebanon Road, Old Hickory, Tennessee 37138. The entire building is approximately eight thousand (8,000) square feet and the Company occupies approximately twenty two hundred (2200) square feet of which one half of this area is dedicated to a state of the art recording studio. The recording studio will be used to provide a service to artists and labels in need of such services, at a fee. During periods of low usage, the studio may be rented out as a supplemental source of revenue. The remainder of the facility is used for administrative purposes. The building is rented under a lease agreement. The lease period is seven years, (7) beginning from May,25, 2001 and ending on June 1, 2007.
The Company does not currently have any interests relating to investments in real estate, interest in real estate or real estate mortgages.
Item 3. Legal Proceedings .
The Company has been named in a lawsuit filed October 23, 2001, in Bergen County, New Jersey. The suit seeks damages of approximately $95,000 for breach of a lease agreement. Management continues to investigate the merits of this claim but does not believe that settlement of this claim, if any, will have a material effect on the financial statements. The Company is not a party to any other pending legal proceeding.
Item 4. Submission of Matters to a Vote of Security Holders .
A Special Shareholders Meeting was held on September 14, 2001. Submitted for a vote was the matter of changing the corporation's name to Eline Entertainment Group, Inc. At the date of the meeting, the Company had issued and outstanding 2,940,169 shares of common stock. 2,891,000 shares voted in favor of the name change; no shares were opposed and none abstained.
PART II
Item 5. Market for Common Equity and Related Stockholders Matters .
The Company's common stock is traded on the OTC Bulletin Board. The stock is not as liquid as the stock of other companies that are on traded on the NASDAQ because of trading on the OTCBB. Additionally, of the four million one hundred fifty three thousand six hundred sixty seven (4,153,667) shares outstanding, there are one million six hundred twenty-one thousand and five (1,621,005) free trading shares and two million five hundred thirty two thousand and six hundred soxty two (2,532,662) shares that are restricted The number of holders of record of common stock as of October 31, 2001 is two hundred twenty eight (228).
The following table sets forth the high and low closing price for the Company's common stock, in U.S. Dollars, by NASDAQ during each quarter since the stock was traded.
Quarter Ended . . . . . . . . . . . . . . . . . . High . . . . . . . . . .Low
July 31, 2000. . . . . . . . . . . . . . . . . . . . 2.50. . . . . . . . . . .2.50
October 31, 2000. . . . . . . . . . . . . . . . . 3.00. . . . . . . . . . .2.50
January 31, 2001. . . . . . . . . . . . . . . . . 2.50. . . . . . . . . . .2.50
April 30, 2001. . . . . . . . . . . . . . . . . . . 1.50 . . . . . . . . . . 1.45
July 31, 2001. . . . . . . . . . . . . . . . . . . 1.01. . . . . . . . . . 1.01
October 31, 2001. . . . . . . . . . . . . . . . 1.24. . . . . . . . . . 1.24
The Company has not paid or declared any dividends in its common stock and does not anticipate paying any dividends in the foreseeable future.
Item 6. Management's Discussion and Analysis/Plan of Operation .
Marketing Strategy And Plan
The marketing strategy is to promote the Website through a multi-media and multi-targeted approach. The Company will utilize print, broadcast media, direct consumer and Internet marketing. The marketing will also be supported by a media relation's strategy. The fundamental objective of the Company's campaign is to establish E Line Music.com as the premier Internet music website for both artists and consumers.
Initially, advertising and promotional efforts will be directed exclusively toward attracting independent artists and labels, for two reasons. Firstly, there is the need to build an inventory of music to sell to consumers. Secondly, the Company anticipates that the independents will purchase services annually averaging one thousand dollars ($1,000), representing an immediate source of revenue. Consumer directed promotion would not start until approximately six months thereafter.
Specific marketing objectives are initially established as:
1. Create awareness within independent artists/label community
2. Create brand awareness among consumers
3. Sell directly to the on-line consumer market
4. Derive market research from marketing initiatives
Broadcast Media
Advertising in this media will be through demographically targeted radio and television stations. The company intends to promote the Website in both major and intermediate markets through a quality theme and consistent message.
Print Media
Print media is intended to include magazines, newspapers and trade publications. Magazine advertising will focus on the music buying public, as well as some general readership periodicals. Promotion of the Website in newspapers will be in major and intermediate markets. The messages in trade publications will be directed at the independent artists and labels.
Direct consumer
This form of advertising will directly target specific consumer groups. The Company is considering direct on-location promotions at college and high school venues, as well as some direct mailings.
On-Line Internet Advertising
The on-line advertising will be segmented into two (2) basic areas. The first is to drive consumer traffic to the Company's Website through banner ads and portal sponsorships. This part of the strategy focuses on advertising with a well-known search engine such as Yahoo!, About.com and MSN. The concept is to create a "sales spiral" that starts with "page impressions," moves to "Website visits" (or "click throughs"), culminating in sales.
The second part of the on-line plan is through a "keyword" approach. E line will initiate short-term keyword banner campaigns that target the Company's prime consumers. The main goal of this keyword component is to generate accurate market data about the Company's target markets. A budget for this portion is not included at this time, but the Company expects to adopt one within one (1) year.
Summary
As of October 31, 2001, the Company had accumulated a deficit during its development stage of $5,503,832. For the year ended October 31, 2001, the Company had revenues of $17,861 and incurred a net loss of $2,956,651, compared to a net loss of $2,565,042 for the year ended October 31, 2000. No revenues were recorded during the year ended October 31, 2000. The increase in revenues is attributable to studio rental income. The increase in the net loss was due primarily to a 419% increase in operating expenses of $1,536,899 compared to operating expenses of $295,989 at October 31, 2000. The increase is attributable to a non cash consulting agreement with an officer and shareholder and other increases primarily salaries, professional fees and web site development.
Cash used in operating activities was $546,134 for the year ended October 31, 2001 compared to $747,593 for the year ended October 31, 2000. Although losses for the year ended October 31, 2001 were $391,609 greater than for the year ended October 31, 2000, approximately $2,000,000 of these losses were for non cash charges resulting from the issuance of Common Stock for services and amortization of unearned consulting fees. Operating and investing activities were primarily funded by borrowings from stockholders of $211,174 and sales of common stock of $271,520 during the year ended October 31, 2001 as compared to borrowings from stockholders of $435,200 and sales of common stock of $709,000 for the year ended October 31, 2000.
Liquidity and Capital Resources
As of October 31, 2001, the Company had insufficient cash and working capital to fund operations during the next year. In order to satisfy the cash needs of the Company for the following twelve months and to satisfactorily implement the business plan, the Company will be primarily dependent upon proceeds from the sale of the Company's common and/or preferred stock and other debt financing. If the Company is unable to obtain adequate funds from the sale of its stock in public offerings, private placements, or alternative financing arrangements, it may be necessary to postpone implementation of the business plan and suspend current operating transactions.
Effective May 29, 2001, the Company declared a one for twenty reverse Common Stock split. The purpose of the split is intended to help the Company in its financing activities. The financial statements contained herein reflect the split both currently and retroactively. Additionally, the Company has issued shares of its Common Stock from time to time in the past to satisfy certain obligations and expects in the future to also acquire certain services, satisfy indebtedness and/or make acquisitions utilizing authorized shares of the capital stock of the Company. If operations and cash flow can be improved through these efforts, management believes that the Company's liquidity problems will be resolved and that the Company can continue to operate. However, no assurance can be given that management's actions will result in profitable operations.
The Company has issued shares of its Common Stock from time to time in the past to satisfy certain obligations and expects in the future to also acquire certain services, satisfy indebtedness and/or make acquisitions utilizing authorized shares of the capital stock of the Company. If operations and cash flow can be improved through these efforts, management believes that the Company's liquidity problems will be resolved and that the Company can continue to operate. However, no assurance can be given that management's actions will result in profitable operations.
Plan of Operation
The plan for operating the company will revolve around the utilization of the key management personnel, increasing support staff as the company grows and, where practical, acquiring the management of in-house technology. The current management and their primary responsibilities are described below. As the Company enters its next stage of growth, there are plans to increase the staff in support of such growth. In addition to administrative personnel, the next key position to fill will be a Sr. Vice President of Marketing and Sales, who will direct the Marketing Strategy to accomplish the objectives of that plan.
The importance of Marketing and Sales is critical to generate revenues through the sales of products and services. However, of initial primary importance is the recruitment of talent and new independent artists and labels. There are dedicated resources assisting the Company in successfully implementing this part of the operations. The Company believes the management team in place, and as planned, possesses the expertise and knowledge to carry out the strategic goals.
Technological aspects are an important part of the strategy, and are the responsibility of the Company's management. E Line currently has a close, contractual relationship with Creative Network, Inc (CNI). CNI is a dedicated vendor to the Company. Its computer related expertise created, maintains and services the website. In its vendor role, CNI will upload new artist music to the Website, create and implement enhancements, and physically house the Server and other computer related equipment. The Company intends to acquire CNI for three hundred and seventy five thousand dollars ($375,000), subject to financing and negotiations with CNI for payment of stock for some or all of the purchase price.
Item 7. Financial Statements .
Included herewith are the audited financial statements for the period ending October 31, 2001.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors
Eline Entertainment Group, Inc.
Old Hickory, Tennessee
We have audited the accompanying balance sheet of Eline Entertainment Group, Inc. as of October 31, 2001, and the related statements of operations, changes in stockholders' deficit, and cash flows for the year then ended. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the 2001 financial statements referred to above present fairly, in all material respects, the financial position of Eline Entertainment Group, Inc. as of October 31, 2001, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
As discussed in Note 3 to the financial statements, the Company is a development stage company with insufficient revenues to fund development and operating expenses. This condition raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 3. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.
RODEFER, MOSS & CO., PLLC
Knoxville, Tennessee
February 22, 2002
ELINE ENTERTAINMENT GROUP, INC.
(A Development Stage Company)
Balance Sheet
October 31, 2001
ASSETS
Current Asset
Cash
$
688
Property, equipment and leasehold improvements, net
247,712
Web site, net
74,335
$
322,735
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Bank overdraft
$
1,378
Accounts payable
220,316
Accrued expenses
95,924
Advance from distributor
94,527
Notes payable - stockholders
308,388
Note payable - consultant
100,000
Current portion of capital lease obligations
22,276
Total Current Liabilities
842,809
Notes payable ' stockholders
160,500
Capital lease obligations, net of current portion
52,291
Total Liabilities
1,055,600
STOCKHOLDERS' DEFICIT
Preferred stock, $.001 par value; 5,000,000 shares
Authorized, none issued
Common stock, $.02 par value; 100,000,000 shares
Authorized; 4,153,667 issued or to be issued
83,073
Additional paid-in capital
11,684,319
Unearned consulting fees and compensation
(6,996,425)
Deficit accumulated during the development stage
(5,503,832)
Total Stockholders' Deficit
(732,865)
$
322,735
The accompanying notes are an integral part of these financial statements.
F-1
ELINE ENTERTAINMENT GROUP, INC.
(A Development Stage Company)
Statements of Operations
Years Ended October 31, 2001 and 2000 and the
Period from November 2, 1999
(Date of Inception) to
October 31, 2001
Year Ended 2001
Year Ended 2000
Period From November 2, 1999 to October 31, 2001
Studio rental income
$
17,861
$
--
$
17,861
Operating expenses
1,536,899
295,989
1,832,888
Web site maintenance
244,794
165,793
410,587
Consulting fees
1,160,985
2,099,805
3,260,790
Interest expense
13,973
3,455
17,428
2,956,651
2,565,042
5,521,693
Net loss
$
(2,938,790)
$
(2,565,042)
$
(5,503,832)
Basic and diluted loss per share
$
(1.94)
$
(4.87)
$
(5.41)
Weighted average
Shares outstanding
1,513,429
527,066
1,018,135
The accompanying notes are an integral part of these financial statements
F-2
ELINE ENTERTAINMENT GROUP, INC.
(A Development Stage Company)
Statements of Changes in Stockholders' Defecit
Years Ended October 31, 2001 and 2000 and the
Period from November 2, 1999 (Date of Inception)
To October 31, 2001
Common Stock
Shares
Amount
Additional Paid-in Capital
Unearned Consulting Fees and Compensation
Deficit Accumulated During the Development Stage
Total
Initial capitalization of Company
500,000
$
10,000
$
(10,000)
$
--
$
--
$
--
Effects of reverse acquisition
16,250
325
168,575
168,900
Common stock sold through
private placement
4,000
80
159,920
160,000
Common stock to be issued
14,725
589,000
589,000
Common stock issued to
consultants
40,000
800
1,599,200
1,600,000
Net loss
(2,565,042)
(2,565,042)
Balance, October 31, 2000
574,975
11,205
2,506,695
--
(2,565,042)
(47,142
Common stock sold through
private placement - March
through May, 2001
6,788
136
271,384
271,520
Issuance of subscribed shares -
March and April 2001
294
(294)
--
Common stock issued to
consultants - March through
August 2001
1,621,904
32,438
3,085,534
(2,452,500)
665,472
Common stock issued to officer
and shareholder - June 2001
1,950,000
39,000
5,232,500
(5,362,500)
--
Stock options issued
497,500
(497,500)
--
Amortization of unearned
consulting fees &
compensation
1,316,075
1,316,075
Net loss
(2,938,790)
(2,938,790)
Balance, October 31, 2001
4,153,667
$
83,073
$
11,684,319
$
(6,996,425)
$
(5,503,832)
$
(732,865)
The accompanying notes are an integral part of these financial statements.
F-3
ELINE ENTERTAINMENT GROUP, INC.
(A Development Stage Company)
Statements of Cash Flows
Years Ended October 31, 2001 and 2000 and the
Period from November 2, 1999 (Date of Inception)
To October 31, 2001
2001
2000
Period From November 2, 1999 to October 31, 2001
Operating Activities
Net loss
$
(2,938,790)
$
(2,565,042)
$
(5,503,832)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization
95,498
36,708
132,206
Amortization of unearned consulting fees and
compensation
1,316,075
--
1,316,075
Note payable issued for consulting fees
--
100,000
100,000
Forfeiture of deposit on building
50,000
--
50,000
Common stock issued and to be issued for consulting
fees and options
665,472
1,640,000
2,305,472
Changes in operating liabilities: Accounting payable
199,101
11,327
210,428
Accrued expenses
66,510
29,414
95,924
Net Cash used in Operating Activities
(546,134)
(747,593)
(1,293,727)
Investing Activities:
Web site design expenditure
--
(94,896)
(94,896)
Deposit on building
--
(50,000)
(50,000)
Purchase of property and equipment
(13,116)
(259,533)
(272,649)
Net Cash Used in Investing Activities
(13,116)
(404,429)
(417,545)
Financing Activities:
Proceeds from borrowings from stockholders
211,174
435,200
646,374
Advance from distributor
94,527
--
94,527
Cash received in reverse acquisition
--
1,302
1,302
Sale of common stock
271,520
709,000
980,520
Cash overdraft
(6,561)
7,939
1,378
Payments on capital lease obligations
(11,410)
(731)
(12,141)
Net Cash Provided by Financing Activities
559,250
1,152,710
1,711,960
Increase in Cash
0
688
688
Cash, beginning of period
688
--
--
Cash, end of period
$
688
$
688
$
688
The accompanying notes are an integral part of these financial statements.
F-4
ELINE ENTERTAINMENT GROUP, INC.
(A Development Stage Company)
Notes to Financial Statements
October 31, 2001
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Nature of Operations Eline Entertainment Group, Inc. ("Eline") is a development stage entertainment industry company formed on November 2, 1999 that maintains an Internet presence designed to fit the needs of independent artists and labels. Through October 31, 2001, Eline has not generated significant operating revenue but has focused primarily on raising capital, developing its web site and building a management team.
On August 15, 2000, Rapid Retrieval Systems, Inc. ("Rapid"), an inactive publicly-held company, acquired Eline by issuing 500,000 shares of its common stock to the stockholders of Eline in exchange for all of the outstanding shares of Eline . As part of the transaction, officers and directors of Rapid received $250,000 in consulting fees which were expensed. The stockholders of Eline (legal acquiree), after the acquisition, owned the majority of the combined company. Accordingly, the combination has been accounted for as a reverse acquisition whereby, for accounting purposes, Eline is the acquirer and Rapid is the acquiree. In connection with the acquisition, Rapid, which is the surviving legal entity, changed its name to Eline Entertainment Group, Inc.
The financial statements of Eline and Rapid (collectively, the "Company") are the historical financial statements of Eline through August 15, 2000, the date of acquisition, at which time the assets and liabilities of Rapid were combined with those of Eline. Rapid's assets included cash of $1,302 and its liabilities included accounts payable of $9,888 and a balance due to a stockholder of $77,514. During the period from January 1, 2000 to August 15, 2000, the only period for which a statement of operations for Rapid is available, Rapid generated no revenue and incurred expenses and a net loss of approximately $30,000. Had the acquisition of Rapid occurred at Eline's inception, on a pro-forma basis, the Company's loss for the period from November 2, 1999 (date of inception of Eline) to October 31, 2000 would have been approximately $2,595,000 (unaudited), or $5.00 per share (unaudited).
Cash and Cash Equivalents The Company considers highly liquid investments with initial maturities of three months or less to be cash equivalents.
Use of estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
Stock Based Compensation The Company measures its equity transactions with non-employees using the fair value based method of accounting prescribed by Statement of Financial Accounting Standards No. 123 (SFAS 123), " Accounting for Stock-Based Compensation ." Under the provisions of SFAS 123, the Company recognizes as a cost or expense, the fair value of stock awards and options to non-employees at the date of grant. The Company continues to use the intrinsic value approach as prescribed by APB Opinion No. 25 in measuring equity transactions with employees.
Property, equipment and leasehold improvements Property, equipment and leasehold improvements are stated at cost, net of accumulated depreciation and amortization. Depreciation and amortization are computed by the Company using the straight-line method over the estimated useful lives of the related assets or their lease term which range from three to seven years.
Web site development costs The Company accounts for costs incurred in connection with the development of its web site in accordance with Statement of Position 98-1, "Accounting for Costs of Computer Software Developed or Obtained for Internal Use" and Emerging Issues Task Force Issue No. 00-2 "Accounting for Web Site Development Costs." Accordingly, all costs incurred in planning the development of a web site are expensed as incurred. Costs, other than general and administrative and overhead costs, incurred in the web site application and infrastructure development stage, which involve acquiring hardware and/or developing software to operate the web site, are capitalized. Fees paid to an Internet service provider for hosting the web site on its server(s) connected to the Internet are expensed. Other costs incurred during the operating stage, such as training, administration and maintenance costs, are expensed as incurred. Costs incurred during the operating stage for upgrades and enhancements of the web site are capitalized if it is probable that they will result in added functionality. Capitalized web site development costs are amortized on a straight-line basis over their estimated useful life of five years.
Impairment of long-lived assets The Company has adopted the provisions of Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of" ("SFAS 121"). Under SFAS 121, impairment losses on long-lived assets, such as property, equipment and leasehold improvements and web site development costs, are recognized when events or changes in circumstances indicate that the undiscounted cash flows estimated to be generated by such assets are less than their carrying value and, accordingly, all or a portion of such carrying value may not be recoverable. Impairment losses are then measured by comparing the fair value of the assets to their carrying amounts.
Income taxes The Company accounts for income taxes pursuant to the asset and liability method which requires deferred income tax assets and liabilities to be computed for temporary differences between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The income tax provision is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities.
Earnings (loss) per share The Company presents "basic" earnings (loss) per common share and, if applicable, "diluted" earnings per common share pursuant to the provisions of Statement of Financial Accounting Standards No. 128, Earnings per Share." Basic earnings (loss) per common share is calculated by dividing net income or loss applicable to common stock by the weighted average number of common shares outstanding during each period. For all periods presented all securities convertible into common shares were anti-dilutive.
Non-Cash Equity Transactions Goods and services acquired through the issuance of common stock are valued on the date of the transaction based on the closing bid price for the Company's common stock.
Note 2 - STATEMENT OF CASH FLOWS SUPPLEMENTAL DISCLOSURE
During the years ended October 31, 2001 and 2000, and for the period from November 2, 1999 (date of inception) to October 31, 2001, the Company paid $1,973, $1,154 and $ 3,127, respectively, in interest and paid no income taxes and the following transactions not affecting cash occurred:
The Company acquired $81,534, $5,174, $86,708 of equipment under capital leases during the years ended October 31, 2001 and 2000, and for the period from November 2, 1999 (date of inception) to October 31, 2001, respectively.
The Company converted a $255,000 note payable due to a stockholder into common stock during the year ended October 31, 2000.
Note 3- BUSINESS CONDITION
Going concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the accompanying financial statements, the Company incurred a cumulative net loss of $5,503,832 during the period from November 2, 1999 (date of inception) to October 31, 2001. In addition, as of October 31, 2000, the Company has a working capital deficiency of $520,074 and a stockholders' deficiency of $732,865. Although a substantial portion of the Company's net loss is attributable to noncash operating expenses, management believes it will need additional equity or debt financing to be able to sustain its operations until it can achieve profitability, if ever. These matters raise substantial doubt about the Company's ability to continue as a going concern.
Management believes that the commercial success and profitability of the Company will depend significantly on its ability to (i) attract and provide services to independent artists and labels, (ii) increase the number of visitors to its current web site, (iii) increase the name recognition of the Company, and (iv) increase the variety of unique products sold on its web site. Management is attempting to raise additional equity financing to sustain operations until it can market its services, expand its customer base and achieve profitability, if ever. The accompanying financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
Note 4 - PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Property, equipment and leasehold improvements consist of the following:
Equipment (including $86,708 under a capital lease) $
172,911
Furniture and Fixtures 10,169
Studio 26,353
Web site hardware 101,915
Leaseholder imrpovements 48,009
Total 359,357
Less accumulated depreciation and amortization (including $15,142 under a capital lease) 111,645
$
247,712
Depreciation and amortization expense for the years ended October 31, 2001 and 2000 was $95,498 and $36,708, respectively.
NOTE 5 - NOTES PAYABLE - STOCKHOLDERS
Notes payable - stockholders are comprised of the following:
Noninterest bearing notes payable to stockholders on demand $
308,388
Noninterest bearing note payable to stockholder on October 31, 2003 160,500
Total $
468,888
NOTE 6 - NOTE PAYABLE - CONSULTANT
At October 31, 2001 the Company had a $100,000 demand note payable to a company affiliated with one of the Company's stockholders for consulting services bearing interest at 10%. Interest expense related to this debt for the year ended October 31, 2001 was $10,000 and for the period from November 2, 1999 (date of inception) to October 31, 2001 was $11,989.
NOTE 7 - RELATED PARTY TRANSACTIONS
During the period from November 2, 1999 (date of inception) to October 31, 2000, the Company expensed approximately $45,000 related to publishing fees and miscellaneous other costs paid to a corporation partially owned by the majority stockholder of the Company.
NOTE 8 - CAPITAL LEASE OBLIGATIONS
The Company leases telephone, computer and studio equipment under capital leases which are summarized as follows:
Payable in monthly installments of $1,826, including interest through October 2005; collateralized by telephone, computer and studio equipment $
81,039
Less amount representing interest 6,472
Total 74,567
Less current portion 22,276
$
52,291
Principal payment requirements under the capital leases in years subsequent to October 31, 2001 are as follows:
Year Ending October 31,
Amount
2002
$
22,276
2003
18,251
2004
15,483
2005
16,060
2006
2,497
$
74,567
this debt for the year ended October 31, 2001 was $10,000 and for the period from November 2, 1999 (date of inception) to October 31, 2001 was $11,989.
NOTE 9 - COMMITMENTS AND CONTINGENCIES
The Company leases its facility under an operating lease that expired in May, 2001 with an option to renew for an additional eighteen months. The Company paid $50,000 for an option to purchase for $425,000 the building in which the Company occupies space. The option expired March 9, 2001 and the Company forfeited the $50,000. Rent expense for the years ended October 31, 2001 and 2000 was approximately $13,365 and $11,000, respectively, and $24,365 for the period from November 2, 1999 (inception) to October 31, 2001.
The Company has been named in a lawsuit filed October 23, 2001, in Bergen County, New Jersey. The suit seeks damages of approximately $95,000 for breach of a lease agreement. Management continues to investigate the merits of this claim but does not believe that settlement of this claim, if any, will have a material effect on the financial statements for the year ended October 31, 2001 or for the period from November 2, 1999 (inception) to October 31, 2001.
NOTE 10 - INCOME TAXES
As of October 31, 2001, the Company's only significant temporary differences were net operating loss carryforwards of approximately $5,385,125 available to reduce future Federal and state taxable income, These carryforwards begin expiring in 2019 through 2021. Due to the uncertainties related to the extent and timing of its future taxable income, the Company has offset the deferred tax assets attributable to the potential benefits of the net operating loss carryforwards of approximately $1,020,000 by an equivalent valuation allowance as of October 31, 2001.
The valuation allowance increased by $1,160,000, $1,020,000 and $2,180,000, respectively, for the years ended October 31, 2001, 2000 and for the period from November 2, 1999 (inception) to October 31, 2001.
A reconciliation of income tax benefit attributable to loss before cinome taxes differed from amounts computed by applying the United States of America federal income tax rate of 34% to loss before income taxes follows:
Year Ended 2001
Year Ended 2000
Period From November 2, 1999 to October 31, 2001
Computed expected income tax benefit $
986,000
$
867,000
$
1,853,000
State taxes
174,000
153,000
327,000
$
1,160,000
$
1,020,000
$
2,180,000
NOTE 11 - CAPITAL STRUCTURE AND COMMON STOCK
Preferred stock:
The Company's Articles of Incorporation authorize the issuance of up to 5,000,000 shares of preferred stock with a par value of $.001 per share. Any preferences accorded to preferred stock are to be determined by the Board of Directors upon issuance (See Note 12).
In March, 2001, the Company amended its articles of incorporation to increase authorization of the Company's $.02 par value common stock from 20,000,000 to 100,000,000 shares.
In May 2001, the Company declared a 20:1 reverse stock split on all of its outstanding shares of common stock. The reverse split has been retroactively applied to all periods presented herein.
Issuances of common stock:
In December 1999, the Company converted a note payable to a stockholder with a balance of $255,000 into 4,250 shares of common stock. Such shares were effectively issued on August 15, 2000 in connection with the reverse acquisition.
From January through March 2000, the Company initiated a private offering of common stock and issued 18,725 shares for $749,000 ($40/share). From November 2000 through December 2001, the Company completed a private offering of common stock and issued 6,788 shares for $271,520 ($40/share). Each unit consisted of one share of common stock and one A, B and C warrant exercisable at $100, $200 and $400, respectively. The warrants expire three years from the dates of grant.
In August and September 2000, the Company issued 40,000 shares of common stock with a fair value of $1,600,000 as payment for consulting services.
From November 2000 through October 2001, the Company issued 1,621,904 shares of common stock with a fair value of $3,085,534 as payment for consulting services. Of these costs, $665,472 was expensed immediately, and $2,452,500 in costs was for services to be delivered over terms of up to five years. Amortization of these prepaid costs in 2001 was $410,144, and the remaining balance included among "Unearned consulting fees and compensation" was $2,042,356.
In May 2001, the Company issued 1,950,000 shares of common stock with a fair value of $5,362,500 to an officer and stockholder as compensation for a consulting agreement expiring in May 2006. Included among "Unearned consulting fees and compensation" at October 31, 2001 was $4,954,068. The Company amortized approximately $408,432 of consulting fees related to this agreement during the year ended October 31, 2001.
Also in, 2001, the Company granted its then chief operating officer options to purchase up to 250,000 shares of the Company's common stock at an exercise price of $.01. These options also expire in ten years from the date of grant. Under the provisions of SFAS 123, the Company recognizes as a cost or expense, the fair value of stock awards and options to non-employees at the date of grant. Accordingly, the Company recognized expense of $497,500 associated with the grants during 2001.
Information regarding the options and warrants for 2001 and from November 2, 1999 (inception) to December 31, 2001 is as follows:
2001
Shares
Weighted Average Exercise Price
Options outstanding, beginning of year
25,575
$
233.33
Options canceled
-
N/A
Options exercised
-
N/A
Options granted
250,000
0.01
Options outstanding, end of year
275,575
21.66
Options exercisable, end of year
275,575
21.66
Option price range, end of year
$.01 to $400
Option price range for exercised shares
N/A
Options available for grant at end of year
0
Weighted average fair value of options granted during the year
N/A
No options were outstanding at the beginning of the period from inception to October 31, 2001, 275,575 options were granted during the period, and no options were canceled or exercised. Outstanding at the end of the period were 275,575 options with prices ranging from $.01 to $400 and weighted average exercise price of $21.66.
Note 12 - SUBSEQUENT EVENTS
On November 8, 2001 the Company issued 4,000,000 shares of Class A special preferred stock to an officer and stockholder. The Class A special preferred stock is to receive no preference in dividend distributions or in the event of liquidation. Each share of Class A special preferred stock receives five votes in stockholder voting matters. Dividend and redemption features are determinable at the sole discretion of the board of directors.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors
Eline Entertainment Group, Inc.
We have audited the accompanying statements of operations, changes in stockholders' deficit and cash flows for the period from November 2, 1999 (date of inception) to October 31, 2000. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, Eline Entertainment Group, Inc's, results of operations and cash flows for the period from November 2, 1999 (date of inception) to October 31, 2000, in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As further discussed in Note 3 to the financial statements, the Company's operations have generated no revenues and have incurred a net loss and it had a working capital deficit and a stockholders' deficit as of October 31, 2000. Such matters raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 3. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ J.H. COHN LLP
Roseland, New Jersey
January 15, 2001
J.H. Cohn, LLP authorizes use of this report in thie 2001 Form 10-KSB of ELine Entertainment Group, Inc. as of 2/28/02
Item 8. Changes in and Disagreements with Accountants .
Registrant's primary accountant, J. H. Cohn, LLC was dismissed on October 15, 2001. None of the principal accountants' report on the financial statements previously filed over the past two years contained an adverse opinion or disclaimer of opinion, or was modified as to uncertainty, audit scope, or accounting principles, disclaimer of opinion or modification. The report did include an explanatory paragraph regarding the company's ability to continue as a going concern. The decision to change accountants was approved by the Board of Directors. There were no disagreements with the former accountants on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure. On October 22, 2001, the Company engaged Roderfer Moss, LLC as its principal independent accountants. Prior to such engagement, the Company did not contact the accountant regarding any matter which would require disclosure in this item.
PART III
Item 9. Directors, Executive Officers, Promoters, and Control Persons .
The Members of the Board of Directors and Executive Officers are as follows:
Sonny Paradise
Chief Executive Officer and Chairman of the Board, age 28. Mr. Paradise has served as a Member of the Board since inception. Mr. Paradise has been in the music industry for more than ten (10) years. In the beginning of his career, he worked with Guy Vaughn, a famous writer and producer. As he developed music skills, he wrote and produced his first album in 1991 for singer Kristy Jones. Subsequent to that achievement, Mr. Paradise produced and wrote five (5) successful country albums. The first album received two nominations from the Country Music Independent Record Association for Album of the year and Male Vocalist of the year. Additionally, among the five (5) albums, there were four (4) top ten independent country hits and two (2) number one country hit songs. The successes achieved with these albums established Mr. Paradise as a fast rising music executives.
In 1993, Mr. Paradise reached another milestone in his career as an executive producer (with Trump Castle) of a nationally televised show titled "Country Quest USA". This show introduced, for the first time, a new way to distribute records via television, geared directly at the country music buying public. He is also responsible for bringing Rap music to a significant level in Nashville, Tennessee by signing two (2) relatively new artists, Pistol and Boogie to the major record labels of Ruthless Records and Relativity Music Group.
In 1995, Mr. Paradise was approached by Rick Wake, a world-renowned producer/writer and President of A&M owned DV8 Records, to help in running his organization. For a short time, he worked with Mr. Wake and was exposed to such big name artists as Celine Dion, Mariah Carey, The Bee Gees, and more. As head of Artists Relations, he was responsible for a Billboard number one hit, "Stand Up" by Love Tribes.
As CEO and Board Chairman, Mr. Paradise will oversee all executive decisions regarding the strategic direction of the Company and report regularly to the Board on such progress. He will also play a significant role with the creative aspects of the Company. He will direct the recruitment of talent, make evaluations of talent and create introductions and oversight to advertising and other alliances with different record labels, producers, etc.
On July 11, 2001 John P. Brancaccio resigned his position as President & COO of ELinemusic.com and took the position of Executive Vice President of Finance as a non-officer and as a non-director.
Anthony Fusolo
Anthony Fasulo, who has acted as an advisor and consultant to ELinemusic.com for two and a half years, became the acting president. Mr. Fasulo graduated from Rollins College in 1996 with a BA in Psychology and a minor in Business. Mr. Fasulo's background included extensive investment relations between brokerage firms and corporations. His knowledge and contacts made him a good candidate as the interim president of Elinemusic.com.
Kevin Grisham
Vice President/Production and Board Member, age 28. Mr. Grisham has served as Vice President and Board Member since inception. In his Production role, Mr. Grisham is responsible for the recruitment, development and evaluation of talent at the Company. He also works in the studio setting as an engineer and acts as a producer with certain artists. He is a well-known disc jockey, and has worked with such notables as Easy E, Above the Law, Bone Thugs and Harmony, Dr. Dre, and Rahiem and Scorpio of Grand Master Flash. In 1988, he won the DMC Mixing Championship at New York's Palladium.
Mr. Grisham will concentrate in the creative and talent development areas
Each Member of the Board of Directors will serve from the date of election until the next annual meeting.
Here's the whole ELNE filing:
www.elinemusic.com/
Received date - Feb. 28, 2002
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C 20549
Form 10-KSB
Annual Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
For: Fiscal year ended October 31, 2001.
ELINE ENTERTAINMENT GROUP, INC.
(Exact name of small business issuer as specified in its charter)
Nevada
(State or other jurisdiction of incorporation or organization)
000-30451
(Commission File Number)
88-0429856
(I.R.S. Tax ID Number)
14919 Lebanon Rd., Old Hickory, TN 37138
(Address of Principal Executive Offices and Zip Code)
(615) 754-1871
(Issuer's telephone number)
ELine Music.com
14919 Lebanon Rd., Old Hickory, TN 37138
(Former name and former address)
(Mark One)
[X] Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended October 31, 2001.
[] Transition report under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from to
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Common
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No []
Check if there is no 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 registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [X]
Revenues for the year ended October 31, 2001 totaled $17,861.
Aggregate Market Value of Voting and Non-Voting Common equity held by non-affiliates: $66,307
Number of Shares Outstanding as of October 31, 2001: 4,153,667
Documents incorporated by reference:
Proxy Statement Filed on March 16, 2001: Part I, Item 4
PART I
Item 1. Description of Business .
Business Development
Eline Entertainment Group Inc, (the "Company" or "Issuer").was originally incorporated under the laws of the State of Nevada as Rapid Retrieval Systems, Inc. ("RRS") on June 12, 1997. In August of 2000, RRS merged with ELine Music.com in an exchange of shares. RRS was the surviving entity of the merger, but subsequently changed its name to ELine Music.com, Inc. On September 14, 2001 Eline Music.com changed it's name to Eline Entertainment Group Inc. The Company has no subsidiaries or affiliated companies.
Business of Issuer
ELine Entertainment Group was established as a full service entertainment company to produce music, develop film & video productions for retail, theatrical, radio, Internet, television and cable broadcasting distribution networks.
The Company has successfully established and continues to produce several radio, television and Internet productions. The internet radio talk show "All About This" featuring Tony Del Vecchio, located at www.elinemusicradio.com is formatted for cable radio / television and is currently one of the feature talk shows in the internet community. The talk show can be listened to daily along with access to past shows in the archive database. A weekly "All About This" TV show is currently in development status with pilot shows available for viewing on the Internet. A spring 2002 demo reel of "All About This" has been produced along with artwork and is available to download as mp3 files.
ELine Entertainment Group has established and continues to develop Vidbox ( www.vidbox.net ) which is an interactive music video web site. Vidbox delivers high quality music videos on-demand. Music Videos from major and independent record labels are featured along with exclusive backstage interviews and concert footage. A Vidbox weekly television show is currently in pre-production and is planned to be in the production stage by the Company's fourth quarter 2002.
Wedding video production work has been developed to generate operational income and separate the Company from traditional dot.com financial philosophies. Magic Moments Video Productions ( www.elineentertainment.com/magicmoments ) operates out of the Stroudsburg, PA office and serves the Pocono, Lehigh Valley and Northwest New Jersey regions along with offering a variety of wedding video packages.
ELine Entertainment has found an increasing demand for the production work of commercials, corporate videos, music videos and electronic press kits ( www.elineentertainment.com/epk ). Marketing strategies are under development to establish ELine Entertainment Group as an elite source for film and video production.
The Company has established an independent record label named Street Flavor International Records. The label's first project, which features a group named "The Burnaz", has a release date of March 18, 2002. The dynamic rap group has samples of their music available at www.theburnaz. net. ELine Entertainment is reviewing multiple country, rap and rock music projects for production, and plans additional releases in the third and fourth quarters of 2002.
ELine Entertainment Group has continued to develop www.elinemusic.com , which was created to fill a void that currently exists in the entertainment/music business. Major labels, of which there are only five (5) or six (6), control about ninety-five percent (95%) of the industry. Independent artists and labels ('independents'), which are not part of the major labels, do not have a unified vehicle for the professional presentation of their work or an outlet for sales of their creations. These independents must currently work through fragmented channels, which do not have a significant impact on the industry. As a result, the music of the independents do not get adequate exposure to the consuming public. Additionally, the consumers have limited opportunity to purchase this music.
Formed as an Internet company designed to fit the needs of these independents, the Company's Web-Site Network provides the needed outlet where labels and artists can showcase and sell their music. Through the recruitment of independents, revenues are expected to be generated from artists through the sales of services, such as production and/or airing of music videos, website creation and electronic press kits. Consumer sales will consist of downloaded music (individual songs or full albums) from the Company's website, hard copy sales of CD's and other related consumer products, such as event tickets. Because of the company's contractual financial agreements with the intellectual property owners of all music on the Website, there will be few, if any of the difficulties encountered by other music Internet companies.
As the Company grows, advertising revenues are expected to become an increasingly significant revenue stream. Advertising will be offered through E Line Music Radio, E Line Music TV and other related areas, such as peer-to-peer chat rooms, celebrity chat rooms and banner presentations. The traffic generated through the website is intended to create a natural avenue for targeted demographic advertisers. The Company intends to solicit major and independent labels to advertise on the website to showcase talent through streaming music videos, celebrity interviews, events calendars, etc.
OTHER BUSINESS RELATED MATTERS
ELine Entertainment Group entered into an agreement on October 12, 2001 with IBIZ Technology who, through its state-of-the-art center and WEB-hosting facility, was to help develop and host the Vidbox site (www.vidbox.net), deliver Vidbox content and provide all hardware, technical support staff and facilities required to stream music videos to a worldwide audience. IBIZ was unable to satisfy the agreement due to economic problems and the termination of their co-location center. Both parties agreed to mutually terminate the agreement.
WEB Pay-Per-View, Inc. entered into a joint agreement with ELine Entertainment Group on June 4, 2001 to co-promote live music concerts of national artist and bands. Computer viewers were to use a 24-hour pay-per-view cyber ticketing system. WEB Pay-Per-View was unable to full-fill it's obligations on the joint venture due to inadequate funding. Both parties agreed to set aside the venture until such time as WPPV can secure funding to continue forward.
On April 25,2001 ELinemusic.com entered into an agreement to acquire Soniquest Studios located in Winter park, FL. ELinemusic.com was unable to satisfy it's obligations because of a lack of funding and therefore had no choice but to resend the deal with SoniQuest.
ELinemusic.com finalized a formal contract to acquire Thology Production Group, Inc. on April 15, 2001.
Although the agreement was finalized, due to disclosures to ELinemusic.com from International Digital Holding (IDIG) and much due deligence on the part of ELine, it became evident to ELine that there were many existing problems emanating from the board of directors and affiliated companies of IDIG. What appeared to be the major problem was the non-disclosure of existing problems between IDIG and VME, which owns the Hard & Heavy licensing for the content of RockThology. In a good faith effort ELine paid $45,000 to VME and guaranteed an additional $45,000 to keep the licensing agreement in whole which would allow ELine to seek distribution for the RockThology / Hard & Heavy project. After many hours of negotiations ELine was successful in partially completing a distribution agreement with Prime Entertainment, while keeping in compliance with the terms of agreements with VME and IDIG. ELine, however, was unsuccessful in keeping the IDIG RockThology / Hard & Heavy and Prime Entertainment deal together because of interference from a member of IDIG's board of directors who acted for his own gain and released confidential documents and inside information to Prime Entertainment thus preventing ELine from moving forward to make a fair and equitable deal with all parties mentioned above.
PRODUCTS AND SERVICES
Descriptions
The Company's Web-Site Network, as it stands today, is the product of an investment of approximately $605,000. Because much of the technological work on the website was managed and monitored by the Company, the true value to reproduce this website may be much greater and may reflect a substantial cost savings.
From the Website, all products can be purchased and all services viewed. Of significance is the fact that either single songs, entire albums or customized albums may be purchased. Product purchases can be made through all traditional means, as well as through a uniquely designed prepaid credit card that will cater to adolescents and younger consumers. At present, the website includes links to the categories of Music, Videos, Chat, Label/Artist (sign up) and Eline Radio. Eline Music TV is in the process of being added. (Specifics of these website connections are discussed below.) Website development has been and will continue to be a work-in-progress. It will continually be enhanced to maintain its state-of-the-art leadership capability, as well as to accommodate new products and services to be offered.
The Web-Site Network is positioned as a "one stop" source for all the music needs of both the consumer and artist. As such, the website offers a variety of products and services designed to fill those needs. For the independent artist/label, the following needs are met:
1. outlet for music sales
2. cost effective advertising medium
3. video production/showcase
4. recording studio services and production
5. consulting
For the consumer, the Website provides:
1.ability to purchase single songs/albums/customized albums--downloaded or hard copy
2. exposure to new artists on an international level
3. opportunity to "chat" with artists
4. event ticket sales
5. streaming videos of events/concerts
6. television programming
Independents, who are not connected with a major record label, now have an opportunity to generate revenue through the sales of their music. The Company can upload music to the Website, supplied by the independent, and immediately begin selling. The contracts with independents state that all product sales are split equally between E Line and the independent. For a fee, E Line will also provide recording studio production services. Independents can also advertise through various ways on the Website. For example, the Company can, on a fee basis, provide an individualized website, video production and/or display of an Electronic Press Kit, music video production and /or display, and feature presentation in a "chat" room, and special event advertising.
Consumers will be able to purchase music not readily available through traditional outlets, since many of independent artists have previously had no method by which their music could be heard or purchased. Sales can be generated through single song purchases, whole albums or a combination of songs. In addition to concert ticket sales, other targeted (demographically) consumer products are intended to be offered.
Product/Service Costing
Product costing is structured to yield approximately a fifty percent (50%) gross margin. For the sales of CD's, the financial arrangement with labels/artists provides that they will receive one-half of all music sales, downloaded or hard copy. The feasibility of this arrangement is based on the fact that, once having the infrastructure of the website in place, there are no incremental costs for the sale of a CD album or single song which is downloaded. For hard copies, incremental costs are included in the additional sales charge of $3.00 per CD, plus shipping and handling. Other consumer product sales, as they are developed and offered, are expected to be priced to yield similar margins.
Service revenues are anticipated to yield a the same or greater gross margins. These services will be offered on a fee basis, and will vary with the level of service. The studio facilities, similar to the website, represent an infrastructure that is already in place and not expected to need additional costs to service. If necessary, pricing for services will need to account for the appropriate margin on other incremental costs incurred.
Competitors' Offerings
In the short history of the E-commerce industry, Internet entertainment/music companies have proliferated, failed and in some cases succeeded. As such, the changing landscape of competition often makes it difficult to identify competitive companies. The Company has made a comparative analysis of itself to the competitive environment (as of September, 2000) by using the most desirable attributes that a website can offer. Based on this analysis, the Company believes that it is well positioned to compete successfully in the industry.
MARKET ANALYSIS
The most developed and predominant market for the internet is in North America. Initially, this is where E Line will concentrate its market efforts, specifically in the United States.
The dominant technology that is used for music Internet sites is Mp3. Almost all Internet music websites, including E Line Music, utilize this technology. It downloads compressed music files while maintaining high quality sound. As a result, the average consumer, without sophisticated computer equipment, can take full advantage of quality music downloads. The focus of our market is the average consumer in the Mp3 arena.
The prime target market at which E Line will focus its promotional efforts will be those age sixteen (16) to thirty-five (35). This represents approximately sixty five (65) million users. This group is familiar with Mp3 technology and represents motivated purchasers. A part of the strategy is to attract the thirty (30) plus million US Internet users who have yet to visit Mp3 websites.
The market outside of North America is substantial and will become a secondary focus, after concentration on the United States and Canada.
Reports to Security Holders
The Company will provide an annual report to its Security Holders on Form 10-KSB, which includes audited financial statements, which is filed with the Securities and Exchange Commission. The public may read and copy any materials filed with the SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. The Public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC and the address of that website is www.sec.gov .
Item 2. Description of Property .
The Company operates its headquarters from building facilities located at 14919 Lebanon Road, Old Hickory, Tennessee 37138. The entire building is approximately eight thousand (8,000) square feet and the Company occupies approximately twenty two hundred (2200) square feet of which one half of this area is dedicated to a state of the art recording studio. The recording studio will be used to provide a service to artists and labels in need of such services, at a fee. During periods of low usage, the studio may be rented out as a supplemental source of revenue. The remainder of the facility is used for administrative purposes. The building is rented under a lease agreement. The lease period is seven years, (7) beginning from May,25, 2001 and ending on June 1, 2007.
The Company does not currently have any interests relating to investments in real estate, interest in real estate or real estate mortgages.
Item 3. Legal Proceedings .
The Company has been named in a lawsuit filed October 23, 2001, in Bergen County, New Jersey. The suit seeks damages of approximately $95,000 for breach of a lease agreement. Management continues to investigate the merits of this claim but does not believe that settlement of this claim, if any, will have a material effect on the financial statements. The Company is not a party to any other pending legal proceeding.
Item 4. Submission of Matters to a Vote of Security Holders .
A Special Shareholders Meeting was held on September 14, 2001. Submitted for a vote was the matter of changing the corporation's name to Eline Entertainment Group, Inc. At the date of the meeting, the Company had issued and outstanding 2,940,169 shares of common stock. 2,891,000 shares voted in favor of the name change; no shares were opposed and none abstained.
PART II
Item 5. Market for Common Equity and Related Stockholders Matters .
The Company's common stock is traded on the OTC Bulletin Board. The stock is not as liquid as the stock of other companies that are on traded on the NASDAQ because of trading on the OTCBB. Additionally, of the four million one hundred fifty three thousand six hundred sixty seven (4,153,667) shares outstanding, there are one million six hundred twenty-one thousand and five (1,621,005) free trading shares and two million five hundred thirty two thousand and six hundred soxty two (2,532,662) shares that are restricted The number of holders of record of common stock as of October 31, 2001 is two hundred twenty eight (228).
The following table sets forth the high and low closing price for the Company's common stock, in U.S. Dollars, by NASDAQ during each quarter since the stock was traded.
Quarter Ended . . . . . . . . . . . . . . . . . . High . . . . . . . . . .Low
July 31, 2000. . . . . . . . . . . . . . . . . . . . 2.50. . . . . . . . . . .2.50
October 31, 2000. . . . . . . . . . . . . . . . . 3.00. . . . . . . . . . .2.50
January 31, 2001. . . . . . . . . . . . . . . . . 2.50. . . . . . . . . . .2.50
April 30, 2001. . . . . . . . . . . . . . . . . . . 1.50 . . . . . . . . . . 1.45
July 31, 2001. . . . . . . . . . . . . . . . . . . 1.01. . . . . . . . . . 1.01
October 31, 2001. . . . . . . . . . . . . . . . 1.24. . . . . . . . . . 1.24
The Company has not paid or declared any dividends in its common stock and does not anticipate paying any dividends in the foreseeable future.
Item 6. Management's Discussion and Analysis/Plan of Operation .
Marketing Strategy And Plan
The marketing strategy is to promote the Website through a multi-media and multi-targeted approach. The Company will utilize print, broadcast media, direct consumer and Internet marketing. The marketing will also be supported by a media relation's strategy. The fundamental objective of the Company's campaign is to establish E Line Music.com as the premier Internet music website for both artists and consumers.
Initially, advertising and promotional efforts will be directed exclusively toward attracting independent artists and labels, for two reasons. Firstly, there is the need to build an inventory of music to sell to consumers. Secondly, the Company anticipates that the independents will purchase services annually averaging one thousand dollars ($1,000), representing an immediate source of revenue. Consumer directed promotion would not start until approximately six months thereafter.
Specific marketing objectives are initially established as:
1. Create awareness within independent artists/label community
2. Create brand awareness among consumers
3. Sell directly to the on-line consumer market
4. Derive market research from marketing initiatives
Broadcast Media
Advertising in this media will be through demographically targeted radio and television stations. The company intends to promote the Website in both major and intermediate markets through a quality theme and consistent message.
Print Media
Print media is intended to include magazines, newspapers and trade publications. Magazine advertising will focus on the music buying public, as well as some general readership periodicals. Promotion of the Website in newspapers will be in major and intermediate markets. The messages in trade publications will be directed at the independent artists and labels.
Direct consumer
This form of advertising will directly target specific consumer groups. The Company is considering direct on-location promotions at college and high school venues, as well as some direct mailings.
On-Line Internet Advertising
The on-line advertising will be segmented into two (2) basic areas. The first is to drive consumer traffic to the Company's Website through banner ads and portal sponsorships. This part of the strategy focuses on advertising with a well-known search engine such as Yahoo!, About.com and MSN. The concept is to create a "sales spiral" that starts with "page impressions," moves to "Website visits" (or "click throughs"), culminating in sales.
The second part of the on-line plan is through a "keyword" approach. E line will initiate short-term keyword banner campaigns that target the Company's prime consumers. The main goal of this keyword component is to generate accurate market data about the Company's target markets. A budget for this portion is not included at this time, but the Company expects to adopt one within one (1) year.
Summary
As of October 31, 2001, the Company had accumulated a deficit during its development stage of $5,503,832. For the year ended October 31, 2001, the Company had revenues of $17,861 and incurred a net loss of $2,956,651, compared to a net loss of $2,565,042 for the year ended October 31, 2000. No revenues were recorded during the year ended October 31, 2000. The increase in revenues is attributable to studio rental income. The increase in the net loss was due primarily to a 419% increase in operating expenses of $1,536,899 compared to operating expenses of $295,989 at October 31, 2000. The increase is attributable to a non cash consulting agreement with an officer and shareholder and other increases primarily salaries, professional fees and web site development.
Cash used in operating activities was $546,134 for the year ended October 31, 2001 compared to $747,593 for the year ended October 31, 2000. Although losses for the year ended October 31, 2001 were $391,609 greater than for the year ended October 31, 2000, approximately $2,000,000 of these losses were for non cash charges resulting from the issuance of Common Stock for services and amortization of unearned consulting fees. Operating and investing activities were primarily funded by borrowings from stockholders of $211,174 and sales of common stock of $271,520 during the year ended October 31, 2001 as compared to borrowings from stockholders of $435,200 and sales of common stock of $709,000 for the year ended October 31, 2000.
Liquidity and Capital Resources
As of October 31, 2001, the Company had insufficient cash and working capital to fund operations during the next year. In order to satisfy the cash needs of the Company for the following twelve months and to satisfactorily implement the business plan, the Company will be primarily dependent upon proceeds from the sale of the Company's common and/or preferred stock and other debt financing. If the Company is unable to obtain adequate funds from the sale of its stock in public offerings, private placements, or alternative financing arrangements, it may be necessary to postpone implementation of the business plan and suspend current operating transactions.
Effective May 29, 2001, the Company declared a one for twenty reverse Common Stock split. The purpose of the split is intended to help the Company in its financing activities. The financial statements contained herein reflect the split both currently and retroactively. Additionally, the Company has issued shares of its Common Stock from time to time in the past to satisfy certain obligations and expects in the future to also acquire certain services, satisfy indebtedness and/or make acquisitions utilizing authorized shares of the capital stock of the Company. If operations and cash flow can be improved through these efforts, management believes that the Company's liquidity problems will be resolved and that the Company can continue to operate. However, no assurance can be given that management's actions will result in profitable operations.
The Company has issued shares of its Common Stock from time to time in the past to satisfy certain obligations and expects in the future to also acquire certain services, satisfy indebtedness and/or make acquisitions utilizing authorized shares of the capital stock of the Company. If operations and cash flow can be improved through these efforts, management believes that the Company's liquidity problems will be resolved and that the Company can continue to operate. However, no assurance can be given that management's actions will result in profitable operations.
Plan of Operation
The plan for operating the company will revolve around the utilization of the key management personnel, increasing support staff as the company grows and, where practical, acquiring the management of in-house technology. The current management and their primary responsibilities are described below. As the Company enters its next stage of growth, there are plans to increase the staff in support of such growth. In addition to administrative personnel, the next key position to fill will be a Sr. Vice President of Marketing and Sales, who will direct the Marketing Strategy to accomplish the objectives of that plan.
The importance of Marketing and Sales is critical to generate revenues through the sales of products and services. However, of initial primary importance is the recruitment of talent and new independent artists and labels. There are dedicated resources assisting the Company in successfully implementing this part of the operations. The Company believes the management team in place, and as planned, possesses the expertise and knowledge to carry out the strategic goals.
Technological aspects are an important part of the strategy, and are the responsibility of the Company's management. E Line currently has a close, contractual relationship with Creative Network, Inc (CNI). CNI is a dedicated vendor to the Company. Its computer related expertise created, maintains and services the website. In its vendor role, CNI will upload new artist music to the Website, create and implement enhancements, and physically house the Server and other computer related equipment. The Company intends to acquire CNI for three hundred and seventy five thousand dollars ($375,000), subject to financing and negotiations with CNI for payment of stock for some or all of the purchase price.
Item 7. Financial Statements .
Included herewith are the audited financial statements for the period ending October 31, 2001.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors
Eline Entertainment Group, Inc.
Old Hickory, Tennessee
We have audited the accompanying balance sheet of Eline Entertainment Group, Inc. as of October 31, 2001, and the related statements of operations, changes in stockholders' deficit, and cash flows for the year then ended. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the 2001 financial statements referred to above present fairly, in all material respects, the financial position of Eline Entertainment Group, Inc. as of October 31, 2001, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
As discussed in Note 3 to the financial statements, the Company is a development stage company with insufficient revenues to fund development and operating expenses. This condition raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 3. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.
RODEFER, MOSS & CO., PLLC
Knoxville, Tennessee
February 22, 2002
ELINE ENTERTAINMENT GROUP, INC.
(A Development Stage Company)
Balance Sheet
October 31, 2001
ASSETS
Current Asset
Cash
$
688
Property, equipment and leasehold improvements, net
247,712
Web site, net
74,335
$
322,735
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Bank overdraft
$
1,378
Accounts payable
220,316
Accrued expenses
95,924
Advance from distributor
94,527
Notes payable - stockholders
308,388
Note payable - consultant
100,000
Current portion of capital lease obligations
22,276
Total Current Liabilities
842,809
Notes payable ' stockholders
160,500
Capital lease obligations, net of current portion
52,291
Total Liabilities
1,055,600
STOCKHOLDERS' DEFICIT
Preferred stock, $.001 par value; 5,000,000 shares
Authorized, none issued
Common stock, $.02 par value; 100,000,000 shares
Authorized; 4,153,667 issued or to be issued
83,073
Additional paid-in capital
11,684,319
Unearned consulting fees and compensation
(6,996,425)
Deficit accumulated during the development stage
(5,503,832)
Total Stockholders' Deficit
(732,865)
$
322,735
The accompanying notes are an integral part of these financial statements.
F-1
ELINE ENTERTAINMENT GROUP, INC.
(A Development Stage Company)
Statements of Operations
Years Ended October 31, 2001 and 2000 and the
Period from November 2, 1999
(Date of Inception) to
October 31, 2001
Year Ended 2001
Year Ended 2000
Period From November 2, 1999 to October 31, 2001
Studio rental income
$
17,861
$
--
$
17,861
Operating expenses
1,536,899
295,989
1,832,888
Web site maintenance
244,794
165,793
410,587
Consulting fees
1,160,985
2,099,805
3,260,790
Interest expense
13,973
3,455
17,428
2,956,651
2,565,042
5,521,693
Net loss
$
(2,938,790)
$
(2,565,042)
$
(5,503,832)
Basic and diluted loss per share
$
(1.94)
$
(4.87)
$
(5.41)
Weighted average
Shares outstanding
1,513,429
527,066
1,018,135
The accompanying notes are an integral part of these financial statements
F-2
ELINE ENTERTAINMENT GROUP, INC.
(A Development Stage Company)
Statements of Changes in Stockholders' Defecit
Years Ended October 31, 2001 and 2000 and the
Period from November 2, 1999 (Date of Inception)
To October 31, 2001
Common Stock
Shares
Amount
Additional Paid-in Capital
Unearned Consulting Fees and Compensation
Deficit Accumulated During the Development Stage
Total
Initial capitalization of Company
500,000
$
10,000
$
(10,000)
$
--
$
--
$
--
Effects of reverse acquisition
16,250
325
168,575
168,900
Common stock sold through
private placement
4,000
80
159,920
160,000
Common stock to be issued
14,725
589,000
589,000
Common stock issued to
consultants
40,000
800
1,599,200
1,600,000
Net loss
(2,565,042)
(2,565,042)
Balance, October 31, 2000
574,975
11,205
2,506,695
--
(2,565,042)
(47,142
Common stock sold through
private placement - March
through May, 2001
6,788
136
271,384
271,520
Issuance of subscribed shares -
March and April 2001
294
(294)
--
Common stock issued to
consultants - March through
August 2001
1,621,904
32,438
3,085,534
(2,452,500)
665,472
Common stock issued to officer
and shareholder - June 2001
1,950,000
39,000
5,232,500
(5,362,500)
--
Stock options issued
497,500
(497,500)
--
Amortization of unearned
consulting fees &
compensation
1,316,075
1,316,075
Net loss
(2,938,790)
(2,938,790)
Balance, October 31, 2001
4,153,667
$
83,073
$
11,684,319
$
(6,996,425)
$
(5,503,832)
$
(732,865)
The accompanying notes are an integral part of these financial statements.
F-3
ELINE ENTERTAINMENT GROUP, INC.
(A Development Stage Company)
Statements of Cash Flows
Years Ended October 31, 2001 and 2000 and the
Period from November 2, 1999 (Date of Inception)
To October 31, 2001
2001
2000
Period From November 2, 1999 to October 31, 2001
Operating Activities
Net loss
$
(2,938,790)
$
(2,565,042)
$
(5,503,832)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization
95,498
36,708
132,206
Amortization of unearned consulting fees and
compensation
1,316,075
--
1,316,075
Note payable issued for consulting fees
--
100,000
100,000
Forfeiture of deposit on building
50,000
--
50,000
Common stock issued and to be issued for consulting
fees and options
665,472
1,640,000
2,305,472
Changes in operating liabilities: Accounting payable
199,101
11,327
210,428
Accrued expenses
66,510
29,414
95,924
Net Cash used in Operating Activities
(546,134)
(747,593)
(1,293,727)
Investing Activities:
Web site design expenditure
--
(94,896)
(94,896)
Deposit on building
--
(50,000)
(50,000)
Purchase of property and equipment
(13,116)
(259,533)
(272,649)
Net Cash Used in Investing Activities
(13,116)
(404,429)
(417,545)
Financing Activities:
Proceeds from borrowings from stockholders
211,174
435,200
646,374
Advance from distributor
94,527
--
94,527
Cash received in reverse acquisition
--
1,302
1,302
Sale of common stock
271,520
709,000
980,520
Cash overdraft
(6,561)
7,939
1,378
Payments on capital lease obligations
(11,410)
(731)
(12,141)
Net Cash Provided by Financing Activities
559,250
1,152,710
1,711,960
Increase in Cash
0
688
688
Cash, beginning of period
688
--
--
Cash, end of period
$
688
$
688
$
688
The accompanying notes are an integral part of these financial statements.
F-4
ELINE ENTERTAINMENT GROUP, INC.
(A Development Stage Company)
Notes to Financial Statements
October 31, 2001
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Nature of Operations Eline Entertainment Group, Inc. ("Eline") is a development stage entertainment industry company formed on November 2, 1999 that maintains an Internet presence designed to fit the needs of independent artists and labels. Through October 31, 2001, Eline has not generated significant operating revenue but has focused primarily on raising capital, developing its web site and building a management team.
On August 15, 2000, Rapid Retrieval Systems, Inc. ("Rapid"), an inactive publicly-held company, acquired Eline by issuing 500,000 shares of its common stock to the stockholders of Eline in exchange for all of the outstanding shares of Eline . As part of the transaction, officers and directors of Rapid received $250,000 in consulting fees which were expensed. The stockholders of Eline (legal acquiree), after the acquisition, owned the majority of the combined company. Accordingly, the combination has been accounted for as a reverse acquisition whereby, for accounting purposes, Eline is the acquirer and Rapid is the acquiree. In connection with the acquisition, Rapid, which is the surviving legal entity, changed its name to Eline Entertainment Group, Inc.
The financial statements of Eline and Rapid (collectively, the "Company") are the historical financial statements of Eline through August 15, 2000, the date of acquisition, at which time the assets and liabilities of Rapid were combined with those of Eline. Rapid's assets included cash of $1,302 and its liabilities included accounts payable of $9,888 and a balance due to a stockholder of $77,514. During the period from January 1, 2000 to August 15, 2000, the only period for which a statement of operations for Rapid is available, Rapid generated no revenue and incurred expenses and a net loss of approximately $30,000. Had the acquisition of Rapid occurred at Eline's inception, on a pro-forma basis, the Company's loss for the period from November 2, 1999 (date of inception of Eline) to October 31, 2000 would have been approximately $2,595,000 (unaudited), or $5.00 per share (unaudited).
Cash and Cash Equivalents The Company considers highly liquid investments with initial maturities of three months or less to be cash equivalents.
Use of estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
Stock Based Compensation The Company measures its equity transactions with non-employees using the fair value based method of accounting prescribed by Statement of Financial Accounting Standards No. 123 (SFAS 123), " Accounting for Stock-Based Compensation ." Under the provisions of SFAS 123, the Company recognizes as a cost or expense, the fair value of stock awards and options to non-employees at the date of grant. The Company continues to use the intrinsic value approach as prescribed by APB Opinion No. 25 in measuring equity transactions with employees.
Property, equipment and leasehold improvements Property, equipment and leasehold improvements are stated at cost, net of accumulated depreciation and amortization. Depreciation and amortization are computed by the Company using the straight-line method over the estimated useful lives of the related assets or their lease term which range from three to seven years.
Web site development costs The Company accounts for costs incurred in connection with the development of its web site in accordance with Statement of Position 98-1, "Accounting for Costs of Computer Software Developed or Obtained for Internal Use" and Emerging Issues Task Force Issue No. 00-2 "Accounting for Web Site Development Costs." Accordingly, all costs incurred in planning the development of a web site are expensed as incurred. Costs, other than general and administrative and overhead costs, incurred in the web site application and infrastructure development stage, which involve acquiring hardware and/or developing software to operate the web site, are capitalized. Fees paid to an Internet service provider for hosting the web site on its server(s) connected to the Internet are expensed. Other costs incurred during the operating stage, such as training, administration and maintenance costs, are expensed as incurred. Costs incurred during the operating stage for upgrades and enhancements of the web site are capitalized if it is probable that they will result in added functionality. Capitalized web site development costs are amortized on a straight-line basis over their estimated useful life of five years.
Impairment of long-lived assets The Company has adopted the provisions of Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of" ("SFAS 121"). Under SFAS 121, impairment losses on long-lived assets, such as property, equipment and leasehold improvements and web site development costs, are recognized when events or changes in circumstances indicate that the undiscounted cash flows estimated to be generated by such assets are less than their carrying value and, accordingly, all or a portion of such carrying value may not be recoverable. Impairment losses are then measured by comparing the fair value of the assets to their carrying amounts.
Income taxes The Company accounts for income taxes pursuant to the asset and liability method which requires deferred income tax assets and liabilities to be computed for temporary differences between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The income tax provision is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities.
Earnings (loss) per share The Company presents "basic" earnings (loss) per common share and, if applicable, "diluted" earnings per common share pursuant to the provisions of Statement of Financial Accounting Standards No. 128, Earnings per Share." Basic earnings (loss) per common share is calculated by dividing net income or loss applicable to common stock by the weighted average number of common shares outstanding during each period. For all periods presented all securities convertible into common shares were anti-dilutive.
Non-Cash Equity Transactions Goods and services acquired through the issuance of common stock are valued on the date of the transaction based on the closing bid price for the Company's common stock.
Note 2 - STATEMENT OF CASH FLOWS SUPPLEMENTAL DISCLOSURE
During the years ended October 31, 2001 and 2000, and for the period from November 2, 1999 (date of inception) to October 31, 2001, the Company paid $1,973, $1,154 and $ 3,127, respectively, in interest and paid no income taxes and the following transactions not affecting cash occurred:
The Company acquired $81,534, $5,174, $86,708 of equipment under capital leases during the years ended October 31, 2001 and 2000, and for the period from November 2, 1999 (date of inception) to October 31, 2001, respectively.
The Company converted a $255,000 note payable due to a stockholder into common stock during the year ended October 31, 2000.
Note 3- BUSINESS CONDITION
Going concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the accompanying financial statements, the Company incurred a cumulative net loss of $5,503,832 during the period from November 2, 1999 (date of inception) to October 31, 2001. In addition, as of October 31, 2000, the Company has a working capital deficiency of $520,074 and a stockholders' deficiency of $732,865. Although a substantial portion of the Company's net loss is attributable to noncash operating expenses, management believes it will need additional equity or debt financing to be able to sustain its operations until it can achieve profitability, if ever. These matters raise substantial doubt about the Company's ability to continue as a going concern.
Management believes that the commercial success and profitability of the Company will depend significantly on its ability to (i) attract and provide services to independent artists and labels, (ii) increase the number of visitors to its current web site, (iii) increase the name recognition of the Company, and (iv) increase the variety of unique products sold on its web site. Management is attempting to raise additional equity financing to sustain operations until it can market its services, expand its customer base and achieve profitability, if ever. The accompanying financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
Note 4 - PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Property, equipment and leasehold improvements consist of the following:
Equipment (including $86,708 under a capital lease) $
172,911
Furniture and Fixtures 10,169
Studio 26,353
Web site hardware 101,915
Leaseholder imrpovements 48,009
Total 359,357
Less accumulated depreciation and amortization (including $15,142 under a capital lease) 111,645
$
247,712
Depreciation and amortization expense for the years ended October 31, 2001 and 2000 was $95,498 and $36,708, respectively.
NOTE 5 - NOTES PAYABLE - STOCKHOLDERS
Notes payable - stockholders are comprised of the following:
Noninterest bearing notes payable to stockholders on demand $
308,388
Noninterest bearing note payable to stockholder on October 31, 2003 160,500
Total $
468,888
NOTE 6 - NOTE PAYABLE - CONSULTANT
At October 31, 2001 the Company had a $100,000 demand note payable to a company affiliated with one of the Company's stockholders for consulting services bearing interest at 10%. Interest expense related to this debt for the year ended October 31, 2001 was $10,000 and for the period from November 2, 1999 (date of inception) to October 31, 2001 was $11,989.
NOTE 7 - RELATED PARTY TRANSACTIONS
During the period from November 2, 1999 (date of inception) to October 31, 2000, the Company expensed approximately $45,000 related to publishing fees and miscellaneous other costs paid to a corporation partially owned by the majority stockholder of the Company.
NOTE 8 - CAPITAL LEASE OBLIGATIONS
The Company leases telephone, computer and studio equipment under capital leases which are summarized as follows:
Payable in monthly installments of $1,826, including interest through October 2005; collateralized by telephone, computer and studio equipment $
81,039
Less amount representing interest 6,472
Total 74,567
Less current portion 22,276
$
52,291
Principal payment requirements under the capital leases in years subsequent to October 31, 2001 are as follows:
Year Ending October 31,
Amount
2002
$
22,276
2003
18,251
2004
15,483
2005
16,060
2006
2,497
$
74,567
this debt for the year ended October 31, 2001 was $10,000 and for the period from November 2, 1999 (date of inception) to October 31, 2001 was $11,989.
NOTE 9 - COMMITMENTS AND CONTINGENCIES
The Company leases its facility under an operating lease that expired in May, 2001 with an option to renew for an additional eighteen months. The Company paid $50,000 for an option to purchase for $425,000 the building in which the Company occupies space. The option expired March 9, 2001 and the Company forfeited the $50,000. Rent expense for the years ended October 31, 2001 and 2000 was approximately $13,365 and $11,000, respectively, and $24,365 for the period from November 2, 1999 (inception) to October 31, 2001.
The Company has been named in a lawsuit filed October 23, 2001, in Bergen County, New Jersey. The suit seeks damages of approximately $95,000 for breach of a lease agreement. Management continues to investigate the merits of this claim but does not believe that settlement of this claim, if any, will have a material effect on the financial statements for the year ended October 31, 2001 or for the period from November 2, 1999 (inception) to October 31, 2001.
NOTE 10 - INCOME TAXES
As of October 31, 2001, the Company's only significant temporary differences were net operating loss carryforwards of approximately $5,385,125 available to reduce future Federal and state taxable income, These carryforwards begin expiring in 2019 through 2021. Due to the uncertainties related to the extent and timing of its future taxable income, the Company has offset the deferred tax assets attributable to the potential benefits of the net operating loss carryforwards of approximately $1,020,000 by an equivalent valuation allowance as of October 31, 2001.
The valuation allowance increased by $1,160,000, $1,020,000 and $2,180,000, respectively, for the years ended October 31, 2001, 2000 and for the period from November 2, 1999 (inception) to October 31, 2001.
A reconciliation of income tax benefit attributable to loss before cinome taxes differed from amounts computed by applying the United States of America federal income tax rate of 34% to loss before income taxes follows:
Year Ended 2001
Year Ended 2000
Period From November 2, 1999 to October 31, 2001
Computed expected income tax benefit $
986,000
$
867,000
$
1,853,000
State taxes
174,000
153,000
327,000
$
1,160,000
$
1,020,000
$
2,180,000
NOTE 11 - CAPITAL STRUCTURE AND COMMON STOCK
Preferred stock:
The Company's Articles of Incorporation authorize the issuance of up to 5,000,000 shares of preferred stock with a par value of $.001 per share. Any preferences accorded to preferred stock are to be determined by the Board of Directors upon issuance (See Note 12).
In March, 2001, the Company amended its articles of incorporation to increase authorization of the Company's $.02 par value common stock from 20,000,000 to 100,000,000 shares.
In May 2001, the Company declared a 20:1 reverse stock split on all of its outstanding shares of common stock. The reverse split has been retroactively applied to all periods presented herein.
Issuances of common stock:
In December 1999, the Company converted a note payable to a stockholder with a balance of $255,000 into 4,250 shares of common stock. Such shares were effectively issued on August 15, 2000 in connection with the reverse acquisition.
From January through March 2000, the Company initiated a private offering of common stock and issued 18,725 shares for $749,000 ($40/share). From November 2000 through December 2001, the Company completed a private offering of common stock and issued 6,788 shares for $271,520 ($40/share). Each unit consisted of one share of common stock and one A, B and C warrant exercisable at $100, $200 and $400, respectively. The warrants expire three years from the dates of grant.
In August and September 2000, the Company issued 40,000 shares of common stock with a fair value of $1,600,000 as payment for consulting services.
From November 2000 through October 2001, the Company issued 1,621,904 shares of common stock with a fair value of $3,085,534 as payment for consulting services. Of these costs, $665,472 was expensed immediately, and $2,452,500 in costs was for services to be delivered over terms of up to five years. Amortization of these prepaid costs in 2001 was $410,144, and the remaining balance included among "Unearned consulting fees and compensation" was $2,042,356.
In May 2001, the Company issued 1,950,000 shares of common stock with a fair value of $5,362,500 to an officer and stockholder as compensation for a consulting agreement expiring in May 2006. Included among "Unearned consulting fees and compensation" at October 31, 2001 was $4,954,068. The Company amortized approximately $408,432 of consulting fees related to this agreement during the year ended October 31, 2001.
Also in, 2001, the Company granted its then chief operating officer options to purchase up to 250,000 shares of the Company's common stock at an exercise price of $.01. These options also expire in ten years from the date of grant. Under the provisions of SFAS 123, the Company recognizes as a cost or expense, the fair value of stock awards and options to non-employees at the date of grant. Accordingly, the Company recognized expense of $497,500 associated with the grants during 2001.
Information regarding the options and warrants for 2001 and from November 2, 1999 (inception) to December 31, 2001 is as follows:
2001
Shares
Weighted Average Exercise Price
Options outstanding, beginning of year
25,575
$
233.33
Options canceled
-
N/A
Options exercised
-
N/A
Options granted
250,000
0.01
Options outstanding, end of year
275,575
21.66
Options exercisable, end of year
275,575
21.66
Option price range, end of year
$.01 to $400
Option price range for exercised shares
N/A
Options available for grant at end of year
0
Weighted average fair value of options granted during the year
N/A
No options were outstanding at the beginning of the period from inception to October 31, 2001, 275,575 options were granted during the period, and no options were canceled or exercised. Outstanding at the end of the period were 275,575 options with prices ranging from $.01 to $400 and weighted average exercise price of $21.66.
Note 12 - SUBSEQUENT EVENTS
On November 8, 2001 the Company issued 4,000,000 shares of Class A special preferred stock to an officer and stockholder. The Class A special preferred stock is to receive no preference in dividend distributions or in the event of liquidation. Each share of Class A special preferred stock receives five votes in stockholder voting matters. Dividend and redemption features are determinable at the sole discretion of the board of directors.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors
Eline Entertainment Group, Inc.
We have audited the accompanying statements of operations, changes in stockholders' deficit and cash flows for the period from November 2, 1999 (date of inception) to October 31, 2000. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, Eline Entertainment Group, Inc's, results of operations and cash flows for the period from November 2, 1999 (date of inception) to October 31, 2000, in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As further discussed in Note 3 to the financial statements, the Company's operations have generated no revenues and have incurred a net loss and it had a working capital deficit and a stockholders' deficit as of October 31, 2000. Such matters raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 3. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ J.H. COHN LLP
Roseland, New Jersey
January 15, 2001
J.H. Cohn, LLP authorizes use of this report in thie 2001 Form 10-KSB of ELine Entertainment Group, Inc. as of 2/28/02
Item 8. Changes in and Disagreements with Accountants .
Registrant's primary accountant, J. H. Cohn, LLC was dismissed on October 15, 2001. None of the principal accountants' report on the financial statements previously filed over the past two years contained an adverse opinion or disclaimer of opinion, or was modified as to uncertainty, audit scope, or accounting principles, disclaimer of opinion or modification. The report did include an explanatory paragraph regarding the company's ability to continue as a going concern. The decision to change accountants was approved by the Board of Directors. There were no disagreements with the former accountants on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure. On October 22, 2001, the Company engaged Roderfer Moss, LLC as its principal independent accountants. Prior to such engagement, the Company did not contact the accountant regarding any matter which would require disclosure in this item.
PART III
Item 9. Directors, Executive Officers, Promoters, and Control Persons .
The Members of the Board of Directors and Executive Officers are as follows:
Sonny Paradise
Chief Executive Officer and Chairman of the Board, age 28. Mr. Paradise has served as a Member of the Board since inception. Mr. Paradise has been in the music industry for more than ten (10) years. In the beginning of his career, he worked with Guy Vaughn, a famous writer and producer. As he developed music skills, he wrote and produced his first album in 1991 for singer Kristy Jones. Subsequent to that achievement, Mr. Paradise produced and wrote five (5) successful country albums. The first album received two nominations from the Country Music Independent Record Association for Album of the year and Male Vocalist of the year. Additionally, among the five (5) albums, there were four (4) top ten independent country hits and two (2) number one country hit songs. The successes achieved with these albums established Mr. Paradise as a fast rising music executives.
In 1993, Mr. Paradise reached another milestone in his career as an executive producer (with Trump Castle) of a nationally televised show titled "Country Quest USA". This show introduced, for the first time, a new way to distribute records via television, geared directly at the country music buying public. He is also responsible for bringing Rap music to a significant level in Nashville, Tennessee by signing two (2) relatively new artists, Pistol and Boogie to the major record labels of Ruthless Records and Relativity Music Group.
In 1995, Mr. Paradise was approached by Rick Wake, a world-renowned producer/writer and President of A&M owned DV8 Records, to help in running his organization. For a short time, he worked with Mr. Wake and was exposed to such big name artists as Celine Dion, Mariah Carey, The Bee Gees, and more. As head of Artists Relations, he was responsible for a Billboard number one hit, "Stand Up" by Love Tribes.
As CEO and Board Chairman, Mr. Paradise will oversee all executive decisions regarding the strategic direction of the Company and report regularly to the Board on such progress. He will also play a significant role with the creative aspects of the Company. He will direct the recruitment of talent, make evaluations of talent and create introductions and oversight to advertising and other alliances with different record labels, producers, etc.
On July 11, 2001 John P. Brancaccio resigned his position as President & COO of ELinemusic.com and took the position of Executive Vice President of Finance as a non-officer and as a non-director.
Anthony Fusolo
Anthony Fasulo, who has acted as an advisor and consultant to ELinemusic.com for two and a half years, became the acting president. Mr. Fasulo graduated from Rollins College in 1996 with a BA in Psychology and a minor in Business. Mr. Fasulo's background included extensive investment relations between brokerage firms and corporations. His knowledge and contacts made him a good candidate as the interim president of Elinemusic.com.
Kevin Grisham
Vice President/Production and Board Member, age 28. Mr. Grisham has served as Vice President and Board Member since inception. In his Production role, Mr. Grisham is responsible for the recruitment, development and evaluation of talent at the Company. He also works in the studio setting as an engineer and acts as a producer with certain artists. He is a well-known disc jockey, and has worked with such notables as Easy E, Above the Law, Bone Thugs and Harmony, Dr. Dre, and Rahiem and Scorpio of Grand Master Flash. In 1988, he won the DMC Mixing Championship at New York's Palladium.
Mr. Grisham will concentrate in the creative and talent development areas
Each Member of the Board of Directors will serve from the date of election until the next annual meeting.
Interesting filing for ELNE (.06)
I had told you all about ELNE having dropped the "E" the other day. Here's some information from the filing that you might want to check into....
Item 4. Submission of Matters to a Vote of Security Holders .
A Special Shareholders Meeting was held on September 14, 2001. Submitted for a vote was the matter of changing the corporation's name to Eline Entertainment Group, Inc. At the date of the meeting, the Company had issued and outstanding 2,940,169 shares of common stock. 2,891,000 shares voted in favor of the name change; no shares were opposed and none abstained.
PART II
Item 5. Market for Common Equity and Related Stockholders Matters .
The Company's common stock is traded on the OTC Bulletin Board. The stock is not as liquid as the stock of other companies that are on traded on the NASDAQ because of trading on the OTCBB. Additionally, of the four million one hundred fifty three thousand six hundred sixty seven (4,153,667) shares outstanding, there are one million six hundred twenty-one thousand and five (1,621,005) free trading shares and two million five hundred thirty two thousand and six hundred soxty two (2,532,662) shares that are restricted The number of holders of record of common stock as of October 31, 2001 is two hundred twenty eight (228).
The following table sets forth the high and low closing price for the Company's common stock, in U.S. Dollars, by NASDAQ during each quarter since the stock was traded.
Quarter Ended . . . . . . . . . . . . . . . . . . High . . . . . . . . . .Low
July 31, 2000. . . . . . . . . . . . . . . . . . . . 2.50. . . . . . . . . . .2.50
October 31, 2000. . . . . . . . . . . . . . . . . 3.00. . . . . . . . . . .2.50
January 31, 2001. . . . . . . . . . . . . . . . . 2.50. . . . . . . . . . .2.50
April 30, 2001. . . . . . . . . . . . . . . . . . . 1.50 . . . . . . . . . . 1.45
July 31, 2001. . . . . . . . . . . . . . . . . . . 1.01. . . . . . . . . . 1.01
October 31, 2001. . . . . . . . . . . . . . . . 1.24. . . . . . . . . . 1.24
Here's the website for ELNE:
http://www.elinemusic.com/
I took a position in ELNE today.
They dropped the E and it's showing a funky chart. At open this morning it was at .05/.055.
AGTP did this the other day. It's still extremely low volume for a penny stock with merger news, IMO.
WLDI is moving up - getting a little volume. I still like GONT and it's revenue capabilities.
BYIT is slowly making a move - lots of news for a stock trading at .0075!
CNGG had impressive news last week. It's in the oil/gas sector. Check it out.
I wouldn't suggest following my lead on FCRIE, but I bought a million shares and I'll just pray that they don't R/S on me. It was only 200 bucks for a million shares. From looking at other micro-pennies, it appears that .0001 is the absolute bottom and the possible upside in a bull market could be worth it. IR told me that they'd file on time to avoid pinks. They've had the E before.....
AGTP merger upcoming - headed north!
AGTP is essentially a shell that has filed a letter of intent to acquire Plenum Wireless - expected to close this month. Now
.03/.033.
Another interesting one - CNGG .08/.085
This one is in the oil and gas sector, tapping into proven fields and as you can see from the chart http://finance.yahoo.com/q?s=CNGG.OB&d=t
CNGG is capable of vertical mobility.
Press releases that show great promise have come out in the last couple of weeks. Put it on your watch list....T
Keep the watch on AGTP
Essentially a shell which is acquiring Plenum Wireless, a development stage wireless co. They are due to close this month and the stock is moving up big on relatively low volume. This seems to indicate few sells and the enthusiastic buying may heighten on Monday. http://finance.yahoo.com/q?s=agtp.ob&d=t
Also -- keep watch on BYIT, which has come out with news lately. It may get some real attention soon. Also relatively low volume.
P.S. I mention the low volume to reflect that there's not any dilution going on to counter the impact of the news.
CNGG should move soon, imo.
They've had some good PRs in the last week or so. The volume has still been light, so it looks like dilution is not an issue.
CNGG is trading at about .08 or so. Keep an eye on it.
Also, BYIT has been coming out with news and has not had very much attention yet for a newsworthy stock under a penny. .0075
AGTP should be a big-time winner because it showed real upward mobility (135%) on modest volume (2 million). There's still the merger upcoming this month and we should see a real pop from its present level at .033.
I'm still holding WLDI as they make headlines in the security sector.
I played it Friday, Plato (GBLXQ) from .075 to .095 I thought that I'd quit while I was ahead.
I agree BB!
I agree about when the momentum swings up for WLDI there do seem to be too many (and/or too large) sells for a stock having great news. I'm looking for another rise to around 5-7 1/2 cents and then the previously-described action will kick in if the past pattern prevails. You have to admit, though, that security could easily become a red-hot sector....
I'm glad that you mentioned the Daily List. I seem to remember your being on the daily double pattern that I was on (back in the day...) Still searching for winners -- low
Good looking stocks out there!
GONT and WLDI should do well (WLDI is in airpor/governmentt security and GONT had big revenues news). THBK doubled, as I thought that it would today. There's likely to be more upside, as it doubled on relatively light volume and there seemed to be few sells. If you're into long-term holds, take a gander at SGDE. They have earnings that are awesome and a chart that is out of this world! SGDE is trading at about 5.30
Check out thbk today...eom
THBK makes a good play, I think!
A few days ago, they were at .035 cents or so, went down to current .016 on getting an E. The E only lasted one day and goes off tomorrow. They have merger plans and the stock should start rising rather quickly, IMO. It's pre-E level of a few days ago represents a double......
Here's my take on NLI.....
Hard to figure out = limited exposure. I'm with you Patsy.
I think that the timing and the type of restructuring is the basis of the conversation between NLI and L. If NLI were going BK, then why would they ask to remain on the NYSE? It will be interesting to watch! It seems that the last line ("It is thought the two would support
a rights issue at
Telewest to fund a bid for a restructured NTL.") flies in the face of what seems to be going on. Could it be posturing on the part of Liberty? Something like - "If you don't go along with everything that we say, then we'll just let you go BK and pick up your assets".
News is out of a possible merger
NLI (NYSE) now at .36
- NTL and Telewest explore merger-FT
LONDON, Feb 13 (Reuters) - Executives at Liberty Media(NYSE:LMCA - news) are exploring a long-term plan to merge NTL (NYSE:NLI - news) and Telewest (quote from Yahoo! UK & Ireland: TWT.L), restructuring the debts of both groups to create a single UK cable operator, the Financial Times reported on Wednesday.
The first step, which involves Liberty taking a central role in the financial re-engineering of NTL, is already under discussion between John Malone, Liberty chairman, and Barclay Knapp, NTL chief execuitve, the newspaper reported.
People at Liberty are understood to be interested in a longer-term solution, which would see NTL and Telewest combined to form a national competitor to Rupert Murdoch's British Sky Broadcasting, people following the discussion told the newspaper.
Liberty owns 25.2 percent Telewest and votes together with Microsoft (NasdaqNM:MSFT - news), Telewest's other main investor, in a concert party that controls a majority of Telewest voting rights, the FT said.
It is thought the two would support a rights issue at Telewest to fund a bid for a restructured NTL.
Patsy - PR is out on NLI/L merger!
NTL and Telewest explore merger-FT
LONDON, Feb 13 (Reuters) - Executives at Liberty Media(NYSE:L news) are exploring a long-term plan to merge NTL (NYSE:NLI - news) and Telewest (quote from Yahoo! UK & Ireland: TWT.L), restructuring the debts of both groups to create a single UK cable operator, the Financial Times reported on Wednesday.
The first step, which involves Liberty taking a central role in the financial re-engineering of NTL, is already under discussion between John Malone, Liberty chairman, and Barclay Knapp, NTL chief execuitve, the newspaper reported.
People at Liberty are understood to be interested in a longer-term solution, which would see NTL and Telewest combined to form a national competitor to Rupert Murdoch's British Sky Broadcasting, people following the discussion told the newspaper.
Liberty owns 25.2 percent Telewest and votes together with Microsoft (NasdaqNM:MSFT - news), Telewest's other main investor, in a concert party that controls a majority of Telewest voting rights, the FT said.
It is thought the two would support a rights issue at Telewest to fund a bid for a restructured NTL.
Patsy - about ATOM
I didn't have time to make a call about the actual float figures on ATOM yesterday. Recuperating from an auto accident a couple of weeks ago, I'm actively working on getting a new vehicle and settling my claim with the ins. co.
Did you happen to see the 5 day graph on ATOM ? It suggests a really low float, as the stock doubled quickly on low volume. Anyway, it's something to look at... http://finance.yahoo.com/q?s=ATOM.OB&d=c&k=c4&t=5d
I'll try to get an answer from the company about the actual number.
It's interesting, too, that Liberty Media (NYSE:L) didn't refute the Reuters story that it was buying a big stake in NLI (NYSE), trading at .30 or so. That could cause the shares of NLI to jump considerably, IMO.
You beat me to it, Patsy!
I'll see what I can find out about the float numbers....
If you like low floats - check out ATOM (300K) .06:
http://biz.yahoo.com/p/a/atom.html
Website: http://www.incahoots-stl.com/