-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OeAG2ioaPhRj+Bkuot0iOr1of44G2dHojT0N74jNSvlbrtdV+p43QIjDM7IY0Bu8 5Tr8t+ycuni+/f7jn/P4eg== 0000921895-97-000644.txt : 19970912 0000921895-97-000644.hdr.sgml : 19970912 ACCESSION NUMBER: 0000921895-97-000644 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970909 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ATLANTIC INTERNATIONAL ENTERTAINMENT LTD CENTRAL INDEX KEY: 0001003739 STANDARD INDUSTRIAL CLASSIFICATION: GOLD & SILVER ORES [1040] IRS NUMBER: 133858917 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-27256 FILM NUMBER: 97677063 BUSINESS ADDRESS: STREET 1: 2200 CORPORATE BOULEVARD STREET 2: SUITE 317 CITY: BOCA RATON STATE: FL ZIP: 33431 BUSINESS PHONE: 407 995 2190 FORMER COMPANY: FORMER CONFORMED NAME: CEEE GROUP CORP DATE OF NAME CHANGE: 19951120 10QSB 1 FORM 10QSB UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB / X / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended June 30, 1997 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 ( d ) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________ to___________. Commission File Number: 0-27256 ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD. (Exact name of small business issuer as specified in its charter) DELAWARE 65-0512785 (State or other jurisdiction of (I.R.S. Employer Identification number) incorporation or organization) 2200 Corporate Boulevard, Suite 317, Boca Raton, Florida 33431 (Address of principal executive offices) (561) 995-2190 (Registrant's telephone no., including area code) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES / / NO / X / APPLICABLE ONLY TO CORPORATE ISSUERS State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date. CLASS OUTSTANDING AS OF JUNE 30, 1997 - -------------------------------------- ------------------------------- Common Stock, $.001 par value 9,465,184 TABLE OF CONTENTS Heading Page PART 1. - FINANCIAL INFORMATION Item 1. Financial Statements .........................................1 Consolidated Balance Sheet - June 30, 1997 (Unaudited) .....2-3 Consolidated Statement of Operations (Unaudited)..............4 Consolidated Statement of Changes in Stockholders' Equity (Unaudited) ..................................................5 Consolidated Statement of Cash Flows - Three months and Six months ended June 30, 1996 and 1997 (Unaudited).........6-9 Notes to Consolidated Financial Statements (Unaudited)....10-11 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ................................12-13 PART II. - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K ............................14 Signatures ..................................................15 Exhibit - 27 ................................................16 i PART 1 Item 1. Financial Statements The following unaudited financial statements for the period ended June 30, 1997, have been prepared by Atlantic International Entertainment, Ltd. (the "Company"). 1 ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD. CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1997 (UNAUDITED) June 30, 1997 ------------- (Unaudited) ASSETS CURRENT ASSETS Cash in Bank $ 20,485 Accounts Receivable 1,850,218 Refundable Income Tax - Prepaid Expenses 3,333 ------------ TOTAL CURRENT ASSETS: 1,874,036 ------------ Property and Equipment, at cost - Net of Accumulated Depreciation and Amortization of $49,193 344,796 Software - Net of Accumulated Amortization of $172,437 1,176,016 OTHER ASSETS Investment in Subsidiary: Customer Lists 1,374,687 Goodwill 162,000 ------------ 1,536,687 Accumulated Amortization 41,483 ------------ 1,495,204 Investments 52,962 Security Deposits 7,252 Organization Costs - (Net of Accum Amort of $645) 2,580 Due From Related Party 49,855 Due From Subsidiary - Other Assets 1,302 Capital Lease Prepayments - ------------ TOTAL OTHER ASSETS 1,609,154 ------------ TOTAL ASSETS $ 5,004,002 ============== See accompanying notes to financial statements 2 ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1997 LIABILITIES AND STOCKHOLDERS' EQUITY: CURRENT LIABILITIES Accounts Payable $ 366,339 Accrued Expenses 10,971 Customer Deposits 83,873 Current Portion of Long Term Debt 19,106 Taxes Payable 37,105 Other Current Liabilities 38,837 Due to Officers 11,946 ----------- TOTAL CURRENT LIABILITIES 568,177 OTHER LIABILITIES Long Term Debt Net of Current 11,794 Total Other Liabilities 11,794 ----------- STOCKHOLDERS'S EQUITY: Preferred Stock - Par Value $.001 Per Share, Authorized 10,000,000 Shares, None Issued or Outstanding -0- Common Stock - Par Value $001 Per Share, Authorized 100,000,000 Shares, Issued and Outstanding 9,465,184 Shares 9,465 Additional Paid - in - Capital 3,949,444 Retained Earnings 465,122 ----------- Total Stockholders' Equity 4,424,031 ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $5,004,002 ========== See accompanying notes to financial statements. 3 ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD. CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED JUNE 30, JUNE 30, ---------------------------------------------------------------------- 1996 1997 1996 1997 ---------------------------------------------------------------------- REVENUE Consulting Fees $ 73,713 - $ 231,306 - Software Sales and Related Charges - 1,010,030 - 1,614,278 Support Fees - 6,000 - 6,000 ISP and Website Income - 144,150 - 144,150 ------------- --------- ---------- --------- Total Revenue 73,713 1,160,180 231,306 1,764,428 COST OF SALES Installation and Hardware Costs - 83,396 - 83,397 Internic Regist. Fees / Connect Fees - 50,040 - 50,040 ------------- --------- ---------- --------- Total - 133,436 - 133,437 GROSS PROFIT 73,713 1,026,744 231,306 1,630,991 OPERATING EXPENSES General and Administrative 100,367 380,350 228,064 660,118 Amortization - 106,031 - 166,628 Depreciation 4,547 22,543 4,794 35,573 ------------- --------- ---------- --------- Total Operating Expenses 104,914 508,924 232,858 862,319 Income (Loss) From Operations (31,201) 517,820 (1,552) 768,672 OTHER INCOME (EXPENSE) Interest Income - 1,134 - 3,736 Interest Expense - (1,077) - (1,368) Income Tax (17,751) (60,210) (23,400) (119,068) Loss on Sale of Investments - (20,785) - (20,784) Gain on Sale of Investments 95,000 - 95,250 - ------------- ---------- ---------- --------- Total Other Income (Expense) 77,249 (80,938) 71,850 (137,484) Income From Continuing Operations 46,048 436,882 70,298 631,188 (Loss) from Operations of Discontinued Foreign Subsidiary - - - (69,531) Gain on Sale of Discontinued Foreign Subsidiary - - - 120,895 Total Income from Discontinued Operations - - - 51,364 NET INCOME $ 46,048 $ 436,882 $ 70,298 $ 682,552 Earnings to Date of Purchase Retained Earnings (Deficit) - Beginning 183,089 28,240 158,839 (217,430) Retained Earnings - Ending $ 229,137 $ 465,122 $ 229,137 $ 465,122 ========== =========== ===================== =================== (Loss) Income Per Common Share $ .007 $ 0.046 $ .010 $ 0.073 ========== =========== ===================== =================== Number of Shares 6,803,451 $ 9,465,184 6,803,451 9,357,934 ========== =========== ===================== ===================
See accompanying notes to financial statements. 4 ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD. CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Common Stock Additional Number Paid - In Shares Amount Capital ---------------------------------------- Balance - December 31, 1996 $9,190,184 $9,190 $1,887,376 Sale of Common Stock (Reg S) 75,000 75 524,925 Recapitalization Costs - - (174,750) Asset Acquisition (EmiNet) 200,000 200 1,599,800 Asset Acquisition Costs - - (920) Consolidation Elimination-EmiNet - - 14,238 Income from Continuing Operations - - - Disposal of Discontinued Operations - - 98,775 [Loss] from Discontinued Operations - - - Balance - June 30, 1997 $9,465,184 $9,465 $3,949,444 ==========================================
Retained Total Earnings Preferred Stockholders' (Deficit) Stock Equity ------------------------------------------ Balance - December 31, 1996 $(217,430) $ $ 1,679,136 Sale of Common Stock (Reg S) - - 525,000 Recapitalization Costs - - (174,750) Asset Acquisition (EmiNet) - - 1,600,000 Asset Acquisition Costs - - (920) Consolidated Elimination-EmiNet - - 14,238 Income from Continuing Operations 631,188 - 631,188 Gain on Disposal of Discontinued Operations 120,895 - 219,670 [Loss] from Discontinued Operations (69,531) - (69,531) ---------------------------------------- Balance - June 30, 1997 $465,122 $ - $ 4,424,031 ========================================
See accompanying notes to financial statements 5 ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD. CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED --------------------------------- June 30, 1996 June 30, 1997 --------------------------------- OPERATING ACTIVITIES: (Loss) Income From Continuing Operations $(48,952) $ 436,882 ------------------------------ Cash Flows from Operating Activities: Adjustments to reconcile net loss to net Cash provided by operating activities: Depreciation and amortization 4,547 128,574 Changes in operating assets and liabilities: Decrease (increase) in: Trade accounts receivable 1,500 (1,002,217) Prepaid expenses and other current assets 8,055 37,486 Security Deposits (10,000) - Investments - 56,681 Other assets 3,460 Increase (decrease) in: Accounts payable and Accrued Expenses 670 93,787 Income taxes payable 17,751 37,105 Customer Deposits - 46,000 Other Current Liabilities - 38,836 ------------------------------ Net cash - Continuing Operations - Forward (26,429) (123,406) Discontinued Operations: (Loss) from Discontinued Operations - - Gain on Disposal of Discontinued Operations - - Adjustments to reconcile Net (Loss) to Net Cash - - Operations: Depreciation - - ------------------------------ Changes in assets and liabilities: (Increase) Decrease in: - - Other Assets - - Increase (Decrease) in: Accounts Payable - - Customer Deposits - - Total Adjustments - - ------------------------------ Net Cash - Discontinued Operations - Forward - - ------------------------------ Net Cash - Operating Activities - Forward (26,429) (123,406) ------------------------------ Investing Activities - Continuing Operations Net increase in due from related parties - (737) Net increase (decrease) in Other Receivable (44,788) - Sale (Purchase) of Subsidiary (10,000) - Sale (Purchase) of Investments 105,000 35,897 Sale (Purchase) of property and equipment (37,079) (167,927) ------------------------------ Net cash used in investing activities - Forward 13,133 (132,767)
See accompanying notes to financial statements 6 ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD. CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE THREE MONTHS ENDED JUNE 30, --------------------------------- 1996 1997 --------------------------------- Investing Activities - Discontinuing Operations (Purchase) Disposition of property and equipment - - -------- ----------- Net Cash Investing Activities 13,133 (132,767) -------- ----------- Financing Activities - Continuing Operations Proceeds from issuance of common stock - Increase in loan payable to shareholder 27,500 - Additions to paid in capital 38,303 14,238 Increase in equipment loans - 30,900 Principal payments on capitalized lease and not borrowing - (7,265) -------- ----------- Net cash - Financing Activities - Continuing Operations 65,803 37,873 Financing Activities - Discontinued Operations Additions to Additional paid in Capital - - -------- ----------- Net Cash Financing Activities 65,803 37,873 -------- ----------- Increase (Decrease) in cash and cash equivalents 52,507 (218,300) Cash & cash equivalents beginning of period 157,682 238,785 -------- ----------- Cash & cash equivalents, end of period $210,189 $ 20,485 ======== ========== Supplemental disclosure of cash flow information: Cash paid (received) during the period for: Interest Expense $ - $ 1,077 Income Tax Refund (Applied) $ - $(23,100) Income Tax $ 17,751 $ 60,210
See accompanying notes to financial statements 7 ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD. CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED ------------------------------- June 30, 1996 June 30, 1997 ------------------------------- OPERATING ACTIVITIES: (Loss) Income From Continuing Operations $(24,952) 631,188 ------------ ----------- Cash Flows from Operating Activities: Adjustments to reconcile net loss to net Cash provided by operating activities: Depreciation and amortization 4,794 202,201 Changes in operating assets and liabilities: Decrease (increase) in: Trade accounts receivable (35,250) (1,850,217) Prepaid expenses and other current assets 8,397 77,436 Security Deposits (11,000) - Investments - 56,681 Other assets - 3,231 Increase (decrease) in: Accounts payable and Accrued Expenses 5,600 139,173 Income taxes payable 1,400 37,105 Customer Deposits - 83,242 Other current liabilities 38,836 ------------------------------- Net cash - Continuing Operations - Forward (51,011) (581,124) Discontinued Operations: (Loss) from Discontinued Operations - (69,531) Gain on Disposal of Discontinued Operations - 120,895 Adjustments to reconcile Net (Loss) to Net Cash - - Operations: Depreciation - 1,366 Changes in assets and liabilities: (Increase) Decrease in: Other Assets - 815 Increase (Decrease) in: Accounts Payable - (14,808) Customer Deposits - (27,648) ------------------------------- Total Adjustments - (41,641) ------------------------------- Net Cash - Discontinued Operations - Forward - 11,089 ------------------------------- Net Cash - Operating Activities - Forward (51,011) (570,035) ------------------------------- Investing Activities - Continuing Operations Net increase in due from related parties (31,000) (1,582) Net increase (decrease) in Other Receivable (19,788) - (Purchase) of Subsidiary (10,250) (1,620,000) Sale (Purchase) of Investments 105,500 (73,746) Sale (Purchase) of property and equipment (49,742) (222,719) ------------------------------- Net cash used in investing activities - Forward (5,280) (1,918,047)
See accompanying notes to financial statements 8 ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD. CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE SIX MONTHS ENDED JUNE 30, 1996 1997 Investing Activities - Discontinuing Operations (Purchase) Disposition of property and equipment - 11,110 ------------------------- Net Cash Investing Activities (5,280) (1,906,937) ------------------------- Financing Activities - Continuing Operations Proceeds from issuance of common stock - 1,949,330 Increase in loan payable to shareholder 27,500 (9,709) Additions to paid in capital 14,238 Increase in equipment loans 38,303 30,900 Principal payments on capitalized lease and not borrowing - (7,265) ------------------------- Net cash - Financing Activities - Continuing Operations 65,803 1,977,494 Financing Activities - Discontinued Operations Additions to Additional paid in Capital - 98,775 ------------------------- Net Cash Financing Activities 65,803 2,076,269 ------------------------- Increase (Decrease) in cash and cash equivalents 9,512 (400,703) Cash & cash equivalents beginning of period 200,677 421,188 Cash & cash equivalents, end of period $210,189 $ 20,485 ========================= Supplemental disclosure of cash flow information: Cash paid (received) during the period: Interest $ - 1,368 Income Tax Refund (Applied) $ - (77,215) Income Tax $ 23,400 $119,068
See accompanying notes to financial statements 9 ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD. Notes to Consolidated Financial Statements (Unaudited) June 30, 1997 Note 1 - BASIS OF PREPARATION The accompanying unaudited interim financial statements include all adjustments (consisting only of those of a normal recurring nature) necessary for a fair statement of the results for the interim periods. The results of operations and cash flows for the six month period ended June 30, 1997, are not necessarily indicative of the results of operations or cash flows to be reported for the full year ending December 31, 1997. Note 2 - BUSINESS COMBINATION On July 16, 1996, the Company entered into an Exchange of Stock Agreement and Plan of Reorganization ( the "Stock Exchange Agreement"). Under the terms of the Stock Exchange Agreement, the Company acquired all of the shares of Atlantic International Capital, Ltd. ("Atlantic Capital"), a Delaware corporation, in exchange for an aggregate of 25,183,759 shares of its common stock, of which 7,000,000 shares were immediately issuable and 18,153,759 shares were to be issued following an increase in the Company's authorized capital. The Company plans to satisfy this obligation by issuing approximately 6,061,253 shares of Common Stock to the former Atlantic Capital stockholders following a 1-for-3 share exchange upon the consummation of a merger with and into its wholly-owned subsidiary, Atlantic International Entertainment, Ltd. which was approved by the Company's stockholders on November 18, 1996. Upon consummation of the merger, the Company's authorized capital will increase to 100,000,000 shares of Common Stock, $.001 par value and 10,000,000 shares of Preferred Stock, $.001 par value. The combination has been accounted for as a reverse acquisition, and the combined entity intends to operate under the name Atlantic International Entertainment, Ltd. The consolidated balance sheet as of March 31, 1997 does not reflect the effects of the recapitalization, issuance of the additional common shares, or the reverse stock split, all of which were approved by the stockholders on November 18, 1996. CEEE has conducted only limited operations prior to 1984, and has been substantially inactive since that time. It previously considered itself to be a development stage company as defined in Statement of Financial Accounting Standards No.7. Note 3 - BUSINESS ACQUISITIONS The business acquisition in the first quarter of 1997 has been accounted for under the purchase method. The results of operations of the acquired business are included in the consolidated financial statements from the date acquisition March 26, 1997, the Company concluded its acquisition of 100% of the outstanding stock of The EmiNet Domain, Inc., located in Boynton Beach, Florida. EmiNet is an Internet Service Provider (ISP), and developer of Internet related software products as well as hosting commercial Web sites. The Company paid $20,000 in cash and issued 200,000 shares of the Company's common stock (approximate market value on date of issue $2,000,000). The Stock Purchase Agreement also contains additional payments contingent on the future earnings performance of EmiNet. Any additional payments made, when the contingency is resolved, will be accounted for as additional costs of the 10 ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD. Notes to Consolidated Financial Statements (Continued) June 30, 1997 acquired assets and amortized over the remaining life of the assets. No payments were paid or accrued for the second quarter 1997. The following unaudited pro forma consolidated results of operations for the years ended December 31, 1996 and 1995 are presented as if the EmiNet acquisition has been made at the beginning of each period presented. The EmiNet Domain, Inc. operated as an S Corporation in 1995 and 1996. Included in the expenses to arrive at Net Earnings are reclassifications of Shareholders' Draw to Officers Salaries and Income Tax Expense in the amounts of $26,200 for the short year 1995 and $132,200 for 1996. The unaudited pro forma information is not necessarily indicative of either the results of operations that would have occurred had the purchase been made during the periods presented or the future results of the combined operations. Years ended December 31 1996 1995 ------------------------- Net Sales $ 878,097 $ 818,317 Net earnings (Loss) $ (347,072) $ 178,816 Earnings per common share And common share equivalent $ (.04) $ .02 Note 4 - MAJOR CUSTOMERS Income fees derived from major customers are tabulated as follow:
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, --------------------------------------------------------------- 1996 1997 1996 1997 ---- ---- ---- ---- (Unaudited) (Unaudited) (Unaudited) (Unaudited) Customer A - (Consulting) 8,000 - $ 28,000 - Customer B - (Consulting) 12,000 - 21,500 - Customer C - (Consulting) 48,500 - 131,000 - Customer D - (Software System) - - - 600,000 Customer E - (Software System) - 410,000 - 410,000 Customer F - (Software System) - 450,000 - 450,000 Customer G - (Software System) - 150,000 - 150,000
Note 5 - PER SHARE DATA Per share data are based on the weighted average number of common shares outstanding during the respective periods, retroactively adjusted to reflect the common shares issued in exchange for all outstanding common shares of The EmiNet Domain, Inc., including the additional shares sold pursuant to a "Reg S" offering in February, 1997. 11 ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD. June 30, 1997 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following management's discussion and analysis of financial condition and results of operations contains forward looking statements that involve risks and uncertainties. The Company's actual results could differ materially from those anticipated in these forward looking statements as a result of certain factors discussed herein. RECENT DEVELOPMENTS On February 5, 1997, the Company entered into an agreement to purchase The EmiNet Domain, Inc. ("EmiNet Domain") a Boynton Beach, Florida based Internet Service Provider and Developer of Internet related software products. The purchase price of $1,620,000 was paid in cash and stock. The purchase price recorded reflects a discount in relation to the approximate fair market value of the stock to take into consideration certain restrictions placed upon the stock when issued. The purchase of EmiNet Domain's Commercial Web-hosting and ISP base will bring a significant benefit to the Company's non-gaming Internet products, furthermore, the Internet software development capabilities of EmiNet will augment the Company's on-going gaming product development activities. On March 23, 1997, the Company entered into an Agreement to sell its Netherland Antilles based subsidiary, Atlantic International Entertainment, NV. To Australian Advisors Corporation, a Bahamian corporation. Terms of the sale call for Australian Advisors Corporation to purchase 100% of the stock and assets of the subsidiary, including its license agreement for one webSports(TM)system. In addition to the sale of the Company's subsidiary, a license agreement for one Internet Casino Extension(TM) (ICE(TM)) was also purchased for $600,000. On January 16, 1997, a Stock Purchase Agreement was signed with Brindenberg Securities, A/S under Regulation S under the Securities Act of 1933, as amended. A total of 75,000 shares were issued under this agreement. OVERVIEW During the second quarter of 1997, the Company continued its marketing campaign of its Internet products and the results of operations reflect the installation and operation of two Internet Casino Extension(TM)(ICE(TM)) systems and one webSports(TM) system. Support contracts for these systems are expected to generate an additional monthly income stream of $4,500 for the next forty-eight months. Product development continues as additional features are added to existing products and additions are made at the customer's request. The Company anticipates continued market leadership in the systems offered and anticipate an additional investment in the development and upgrades of our products of approximately $400,000 over the next twelve months. EmiNet Domain, a wholly-owned subsidiary of the Company, is in the process of upgrading its hardware and software in order to better compete with area Internet service providers by offering the latest technology and system features. An aggressive marketing campaign aimed at capturing a larger portion of the market is expected to begin in the fourth quarter. The Company expects to see considerable interest building in its Internet products. The Company has executed contracts and is in the process of installing four Internet Casino Extension(TM) (ICE(TM)) systems as well as four webSports(TM) systems and it is anticipated that such installations will be complete by the close of the third quarter. This is expected to generate sales in excess of $2,000,000 for the quarter. In addition, these installations are expected to generate monthly income from support and maintenance agreements in excess of $10,000 per month over the next forty-eight months. 12 ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD. June 30, 1997 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) The Company has recently entered into a pilot program in order to ascertain the viability of entering additional markets in areas such as Australia. The Company believes the program will be successful and that it will lead to opening a significant market for our systems. As the Company grows, it will continue to add key personnel in the development, support and sales areas. RESULTS OF OPERATIONS The Company incurred expenses of $660,118 in the six months ended June 30, 1997. Such expenses were primarily attributable to marketing the Company's Internet products as well as continued development of its Internet products. During the six month period ended June 30, 1997, the Company had net income of $682,552, of which EmiNet Domain contributed $2,500 in profits. Revenue was $1,764,428 for the second quarter of which EmiNet contributed $143,980. Other income (expenses) included the gain on the sale of its Netherland Antillies based subsidiary, Atlantic International Entertainment N.V., Ltd. of $120,895. The net (Loss) generated by this subsidiary for the first quarter 1997 operations until sale was ($69,531). During 1997 funds of $350,250 were generated from the sale of 75,000 shares of common stock. In the opinion of management, inflation has not had a material impact on the operation of the Company. 13 ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD. PART II Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 27 Financial Data Schedule (b) Reports on Form 8-K The Company filed with the Commission, a report on Form 8-K dated March 7, 1997, reporting the acquisition of 100% of the outstanding stock of The EmiNet Domain, Inc. For financial statement reporting purposes, this transaction is being reported as a purchase. 14 In accordance with the requirements of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Atlantic International Entertainment, Ltd. Date: September 8, 1997 By: /s/ Richard A. Iamunno ----------------------------- (Signature) Richard A. Iamunno, President And Chief Executive Officer Date: September 8, 1997 By: /s/ David P. Halaburda ----------------------------- (Signature) David P. Halaburda Chief Financial Officer 15 EX-27 2 ARTICLE 5 FDS FOR 10-QSB
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD.'S FINANCIAL STATEMENTS AS OF JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND NOTES. 6-MOS DEC-31-1997 JUN-30-1997 20,485 0 1,850,217 0 0 1,874,036 1,742,442 221,630 5,004,002 568,176 0 9,465 0 0 4,414,566 5,004,002 1,764,428 1,764,428 133,436 862,319 20,784 0 1,368 801,620 119,068 631,188 51,364 0 0 682,552 .07 .07
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