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Microcap & Penny Stocks : HITSGALORE.COM (HITT) -- Ignore unavailable to you. Want to Upgrade?

To: bob sims who wrote (1779)	6/4/1999 10:31:00 AM
From: bob sims	Read Replies (4) \| Respond to of 7056

HITSGALORE COM INC Filed on Jun 4 1999 Management's Discussion and Analysis of Financial Condition and Results of Operations As a result of the Merger, the historical financial statements and operations of Old Hitsgalore.com became those of the Company. Old Hitsgalore.com was incorporated on July 21, 1998, began beta operations in August 1998 and launched its website in November 1998. Accordingly, no comparisons can be made between the results of operations for the three months ended March 31, 1999 and 1998, as Old Hitsgalore.com had no operations for the comparable 1998 period. The following discussion should be read in conjunction with the Financial Statements and notes thereto, appearing elsewhere herein. Net revenues- The Company had gross revenues of $463,084 for the three months ended March 31, 1999. A portion of these revenues were from the sale of "Local City Editions (LCEs)". The Company ceased offering LCEs in April 1999 as a result of the sale in a negotiated transaction of LCEs for up to 200 local city areas to Life Foundation Trust for a total purchase price of $10.0 million. The remaining revenues were from the sale of the sponsorship rights and from the Company's bid and rank program. Returns and allowances- The Company provides an allowance for returns and refunds based on estimates. Amounts provided are subject to change. For the three months ended March 31, 1999, the Company provided an allowance of $62,495 or approximately 13.5% of total revenues. Actual returns and allowances were approximately $8,900 or approximately 1.9% of total sales. Selling, general and administrative expenses- Selling, general and administrative expenses consist primarily of sales commissions, salaries and wages and the cost of communications services. Such expenses totaled approximately 39% of gross revenues for the 1999 1st quarter. DEPRECIATION AND AMORTIZATION Depreciation and amortization for the three months ended March 31, 1999 totaled approximately $4,343. INCOME TAXES For the three months ended March 31, 1999, the provision for income taxes was approximately 38% of pre-tax income. The principal reason for the difference between the Federal income tax rate of 34% and the effective tax rate was the effect of state income taxes. LIQUIDITY AND CAPITAL RESOURCES For the three months ended March 31, 1999, the Company generated cash from operations totaling approximately $92,834 and received cash of approximately $672,932 from the issuance of 896,795 shares of its common stock and upon exercise of outstanding options and warrants. The principal uses of cash were for capital expenditures and reductions in merger liabilities assumed of approximately $34,093 and $151,452, respectively. As of March 31, 1999, the Company does not have any used or unused lines of credit or any other committed and unused financing facilities. The Company has entered into various transactions with The Life Foundation Trust ("LFT") for the sale of its common stock and the purchase by LFT of Local City Editions ("LCEs") for up to 200 local city areas. The transactions with LFT call for the payment of up to $120.0 million to the Company within the next twelve months. These payments are or will be secured by the pledge or an assignment of certain assets to the Company by LFT. The Company believes that cash flows from operations will be sufficient to meet its liquidity needs for the next twelve months.