-----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, TBLk9/xhPFYfn6d3mrnHhu6uRW7xTPl1sdtSbjKqTBhSfKCwYNNqRhlxry2yvKi7 AFnBlU/1NUHG3fR8JiIR2Q== 0001003297-99-000120.txt : 19990809 0001003297-99-000120.hdr.sgml : 19990809 ACCESSION NUMBER: 0001003297-99-000120 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990802 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SBI COMMUNICATIONS INC CENTRAL INDEX KEY: 0001013453 STANDARD INDUSTRIAL CLASSIFICATION: COMMUNICATION SERVICES, NEC [4899] IRS NUMBER: 581700840 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-28416 FILM NUMBER: 99676241 BUSINESS ADDRESS: STREET 1: 10619 WEST ATLANTIC BLVD STREET 2: SUITE 104 CITY: CORAL SPRINGS STATE: FL ZIP: 33071 BUSINESS PHONE: 2054478797 MAIL ADDRESS: STREET 1: 10619 WEST ATLANTIC BLVD STREET 2: SUITE 104 CITY: CORAL SPRINGS STATE: FL ZIP: 33071 10QSB 1 Securities and Exchange Commission Washington, D.C., 20549 FORM 10-QSB (Mark one) [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal quarter ended March 31, 1999 Commission file Number 0-28416 or [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 ============================================================================= SBI Communications, Inc. (Name of small business issuer specified in its charter) ============================================================================= Delaware 58-1700840 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) Post Office Box 729 - 103 Firetower Road - Leesburg, Georgia 31763 (Address of Principal executive offices) (Zip code) (912) 759-9176 Issuer's telephone number ============================================================================= Securities registered pursuant to 12(b) of the Act: None Securities to be registered pursuant to Section 12(g) of the Act: Common Stock and Preferred Stock Common Stock $0.001 Par Value - Preferred Stock $5.00 Par Value (Title of Class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 [ ] As of May 14, 1999 the Registrant had 5,570,439 shares of its $0.001 par value Common Stock Outstanding. ============================================================================= May 14, 1999 Table Of Contents SBI COMMUNICATIONS, INC. FORM 10-QSB INDEX Page PART I. FINANCIAL INFORMATION Item 1. Consolidated Financial Statements 3 Consolidated Balance Sheets as of December 31, 1998 and and March 31, 1999 Consolidated Statements of Operations 4 for the three months ended March 31, 1998 and 1999 Consolidated Statement of Changes 4 in Shareholders' Equity for the three months ended March 31, 1999 Consolidated Statements of Cash Flows 5 for the three months ended March 31, 1998 and 1999 Notes to Consolidated Financial State- 6 ments Item 2. Management's Discussion and Analysis 7 of Financial Condition and Results of Operations Condition Part II. OTHER INFORMATION Item 1. Legal Proceedings 10 Item 2. Changes in Securities 10 Item 3. Defaults Upon Senior Securities 11 Item 4. Submission of Matters to a Vote 11 of Security Holders Item 5. Other Information 11 Item 6. Exhibits and Reports on Form 8-K 11 Signatures 11 2 PART I. FINANCIAL INFORMATION Financial Statements SBI COMMUNICATIONS, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS (UNAUDITED)
March 31, Dec. 31, 1999 1998 ------------ ------------ ASSETS ------ Current assets: Cash $ 485 $ 485 Accounts receivable, -0- -0- Note receivable from affiliates 3,600 3,600 Inventories 79,444 79,444 ------------ ------------ 83,529 83,529 Property and equipment, net of accumulated depreciation 7,458,345 7,458,345 Other assets: Deferred loan costs 5,071 5,071 Deposits 63,065 63,065 ------------ ------------ $ 7,610.010 $ 7,610,010 ============ ============= LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Current liabilities: Note payable to trust managed by a shareholder $ 150,000 $ 150,000 Mortgage note payable-current portion (Note 5) 1,050,000 1,050,000 Capitalized leases-current portion 17,284 17,284 Accrued wages due to principal shareholder (Note 2) 355,000 355,000 Advances due to principal shareholder 12,698 12,698 Account payable and accrued expenses 169,071 169,071 ------------ ------------ 1,754,053 1,754,053 Capitalized leases, long-term portion 61,459 61,459 Other notes payable 52,438 52,438 ------------ ------------ Total liabilities 1,867,950 1,867,950 ------------ ------------ Stockholders' equity: Preferred stock, par value $5.00; 10,000,000 shares authorized; 1,653,000 and 1,693,000 shares issued and outstanding at June 30, 1998 and December 31, 1998, respectively 8,265,000 8,265,000 Common stock, par value $.001; 40,000,000 shares authorized; 5,570,439 shares issued and outstanding at March 31, 1999 and 5,345,439 as of December 31, 1998 5,570 5,570 Paid in capital 3,667,118 3,667,118 Accumulated deficit (6,195,628) (6,195,628) ------------ ------------ 5,742,060 5,742,060 ------------ ------------ $ 7,610,010 $ 7,610,010 ============ ============= See accompanying notes to consolidated financial statements.
3 SBI COMMUNICATIONS, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, (UNAUDITED)
1999 1998 ----------- ------------ Revenues: Bingo hall rent $ - $ -0- Kitchen and gift shop revenues - -0- Other income - 172 ------------ ------------ - 172 ----------- ------------ Expenses: Cost of sales - kitchen and gift shop - -0- Administrative salaries and related expenses 30,000 38,570 Facility costs 22,971 10,864 Other general and administrative 30,000 32,876 Production costs - -0- Depreciation and amortization 88,539 72,500 Interest and finance expenses 14,769 14,769 ----------- ------------ 186,279 169,579 ----------- ------------ Net loss ($ 186,279) ($ 169,579) =========== ============ Net loss per share ($ 0.03) ($ 0.03) =========== ============ See accompanying notes to consolidated financial statements.
4 SBI COMMUNICATIONS, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, (UNAUDITED)
1999 1998 -------------- -------------- Cash flows from operating activities: Net (loss) ($ 186,279) ($169,579) Adjustments to reconcile net loss to cash provided (used) by operating activities: Depreciation and amortization 88,539 72,500 Amortization of deferred loan costs 16,038 16,309 Charge offs of long-term receivables - 8,178 Change in accounts receivable, trade -0- -0- Change in inventories 6,621 - Change in prepaid expenses ( 12,172) Change in accounts payable and accrued expenses 83,629 126,226 -------------- -------------- Cash (used) by operating activities 8,548 41,462 -------------- -------------- Cash flows from investing activities: Proceeds from repayment of notes receivable from affiliate 5,499 - Purchase of real estate ( 748,622) ( 17,618) -------------- -------------- Cash (used) by investing activities ( 743,123) ( 17,618) -------------- -------------- Cash flows from financing activities: Loans from shareholders/affiliates 12,698 34,054 Proceeds From Mortgaged (see note 5) $ 1,050,000 - Mortgage loan repayments ( 239,701) - Capital lease repayments ( 964) ( 3,327) -------------- -------------- Cash flows provided by financing activities $822,033 30,727 -------------- -------------- Net increase (decrease) in cash ( 21,743) ( 21,743) Cash at beginning of period -0- 22,228 -------------- -------------- Cash at end of period $ -0- $ 485 ============== ============== Supplemental information: Income taxes paid $ - $ - ============== ============== Interest paid $ 28,311 $ 32,102 ============== ============== Items not requiring use of cash: Preferred stock converted ($ - 0- ) ($200,000) Issuance of common stock -0- 200,000 -------------- -------------- Paid in capital $ - - ============== ============== See accompanying notes to consolidated financial statements.
5 SBI COMMUNICATIONS, INC. AND SUBSIDIARY NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 1998 AND DECEMBER 31, 1997 Note 1 - Selected disclosures The accompanying unaudited consolidated financial statements, which are for interim periods, do not included all disclosures provided in the annual consolidated financial statements. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and the footnotes thereto contained in the Form 10-KSB for the year ended December 31, 1998 of SBI Communications, Inc. (the "Company"), as filed with the Securities and Exchange Commission. The December 31, 1998 balance sheet was derived from the unaudited consolidated financial statements, but does not include all disclosures required by generally accepted accounting principles. In the opinion of the Company, the accompanying unaudited consolidated financial statements contain all adjustments (which are of a normal recurring nature) necessary for a fair presentation of the financial statements. The results of operations and cash flow for the Three months ended March 31, 1999 and 1998 are not necessarily indicative of the results to be expected for the full year. There were no activity in the third quarter. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reporting amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Note 2 - Related party transactions The Company accrued salaries payable to the Company's principal shareholder totaling $30,000 for the quarter ended March 30, 1999 and 1998, respectively. All amounts owed to the shareholder are payable on demand. Note 3 - Net loss per share The Company's net loss per share was calculated using 5,570,439 and 5,570,439 weighted average shares outstanding for each of the quarter ended March 31, 1999 and December 31, 1998, respectively. Although convertible preferred stock is a common stock equivalent, with a conversion rate of approximately 10 shares of common stock (based upon an approximate market price for common stock of $0.50) for each share of preferred stock, preferred stock conversion has not been included in the calculation of earnings per share in that to do so would be antidilutive. Note 4 - Preferred stock activity In July, 1996, 5,000 shares of preferred stock with a par value of $25,000 were to be issued to cover $20,000 in closing costs relating to the mortgage note receivable. The Company inadvertently issued 25,000 shares rather than 5,000 shares, and both parties agreed that the related certificate would be returned and reissued. In that the certificate had not been returned as of December 31, 1996, the full 25,000 shares were treated as outstanding at that time, with a related reduction in paid in capital. In the first quarter of 1997, the certificate was returned, and a new certificate for 5,000 shares was issued. The stockholders' equity section of the balance sheet as of March 31, 1997, has been adjusted to reflect the reduced number of preferred shares outstanding, with a corresponding adjustment to paid in capital. 6 Note 5 - Mortgage The company borrowed $1,050,000.00 to pay the State of Alabama, on behalf of Cranberry-Magnetite, the previous owner tax liability of $748,422.00 and to pay the second mortgage to National Mortgage of $263,275. The company is also securing a loan to refinance the property, renovate and expand the company business. The above Note of $1,050,000.00 Is due and payable. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS SBI Communications, Inc. (the "Company"), was originally organized in the State of Utah on September 23, 1983, under the corporate name of Alpine Survival Products, Inc. Its name was subsequently changed to Justin Land and Development, Inc. during October, 1984, and then to Supermin, Inc. on November 20, 1985. On September 29, 1986, Satellite Bingo, Inc. was the surviving corporate entity in a statutory merger with Supermin, Inc., a Utah corporation. In connection with the above merger, the former shareholders of Satellite Bingo, Inc. acquired control of the merged entity and changed the corporate name to Satellite Bingo, Inc. Through shareholder approval dated March 10, 1988, the name was changed to its current name of SBI Communications, Inc. On January 1, 1993, the Company executed a plan of merger that effectively changed the Company's state of domicile from Utah to Delaware. Although the Company is currently a Delaware corporation, on January 31, 1998, the stockholders and Board of Directors approved a plan to change the Company's corporate domicile to the State of Nevada. Management anticipates executing the plan during 1999. The Company plans to lease or operate bingo halls and to provide interactive satellite delivered bingo games, game shows and other similar telecommunication gaming products or services to television viewers throughout the United States. The Company has also developed a system that can be integrated into all standard communications channels including the World Wide Web for interactive play throughout the World. Our Web site or the company's URLs are http://www.sBid.net, http://www.sbicom.com, http://www.abingo.com, http://www.sbicommunications.com, http://www.globalot.com or http://www.frontierpalace.com. Currently, the Company's is developing its web site and has a sales for the Alabama property. Piedmont Jaycees did not perform as represented, and management did not develop business. Gross revenues were 50% of their projections which did not fulfill agreement in their premises lease: Jaycees salaries exceeded budgets; operations schedule was not full time. Therefore, their lease was allowed to not be renewed at the first of 1998. At the same time, local political influences developed negative local law changes as a reaction to the Piedmont Jaycees operation and a Bingo Commission being implemented to oversee all bingo operation in Calhoun County. Local ordinances are being adopted to limit all charity bingo operations to the amount of employees and establish a requirement of net proceeds being donated for charitable purposes, with no revenues to the employees of the charity. 7 In reaction to the above political/legal trends, management of it's wholly owned subsidiary (SBI Communications, Inc. of Alabama) has a signed purchase agreement with Regency Communications, Inc. of Dallas, Texas to purchase the Piedmont property for $7,100,000.00. The sale of this property should be closed with-in the next thirty days. Management is working in the Boca Raton/Fort Lauderdale, Florida area and believes that the local charity Bingo market is more hospitable in Southeast Florida, rather than northeast Alabama. The company plans to open a facilities in the Southeast Florida and Maryland area to lease to local charities to conduct bingo games. Regency plans are to have an inbound telemarketing, fulfilment center and backbone to the Internet at the Piedmont location. Regency plans to contract with SBI to set all phases of operation in place. Plans are to employ approximately 250 to 300 employees. Internet Web Site The company established a secure web site allowing individuals to become members in "A Shopping Club" with membership fees of $19.95 per month. The shopping club will provide a variety of products, services, bingo game sweepstakes related events and items, travel and consumer goods; the opportunity is primarily a shopping club. No charge is made to participate in the bingo games. Games will be available for play 24 hours a day seven days a week and new games played every 12 minute. Winners will collect their winning of the on-going Globalot Bingo Sweepstake games either by crediting their account or being delivered to the member at their option. Payments for membership will be made by credit card, bank check, debit/ATM cards and by lec billing or "900" telephone number. The company's URLs are http://www.abingo.com - http://www.sBid.com - http:/www.sbicom.com - http://www.globalot.com - http://www.sbicommunications.com - http://www.forntierpalace.com. The web site is hosted by the company and fulfillment will be provided by Regency Communications, Inc. The company will also provide its services to other companies desiring access to the Internet. The company will generate additional revenues by offering web page/site design/development, advertising, fulfilment and its web services to others. This would include equipment and tee access to the Internet. At the same time, local political influences developed negative local law changes as a reaction to the Piedmont Jaycees operation. Local ordinances are being adopted to limit all charity bingo operations and the amount of employees and establish a requirement of near gross proceeds being donated for charitable purposes regardless of reasonable and necessary operation expenses with no revenues to the employees of the charity. At this time it is not feasible to lease the facility for the operation of bingo. In reaction to the above political/legal trends, management has negotiated the sales of the property to a Dallas, Texas group, for the operation of a telecommunication company for "800" inbound. The Company believes that the $5 billion dollar North America charitable bingo industry is fragmented and inefficient, yet potentially profitable. The Company's strategy, therefore, is to consolidate a portion of the industry to build a national chain of bingo centers in lucrative markets. The Company believes that its industry experience, economies of scale and financial resources will provide a competitive advantage over competing bingo operations, which should enable the Company to effectively execute its long-term growth plan. The Company currently has only one bingo center located in Piedmont, Alabama. The Company intends to continue its expansion 8 through acquisitions and developments in other selected markets throughout the United States. Management's goal is to open other bingo centers by end of 1999. RESULTS OF OPERATION THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THREE MONTHS ENDED MARCH 31, 1998. The Company generated revenues of $-0- during its first fiscal quarter ended March 31, 1998, as compared to $-0- in the comparable period of the prior fiscal year, which represents a decrease. The revenue decrease was due to renovation of facility in Piedmont. The Company expects quarterly revenues to increase when the new leases are in place. Also, upon the successful operation of the Company's Web site and broadcasting of it's interactive programming. Direct operating costs of the Company's bingo center totaled $186,279 during the first quarter of 1999 versus $169,579 in the comparable 1998 quarter, which represents a 9% increase. Approximately 60% of the current period's direct operating costs were comprised of depreciation and amortization, which are relatively fixed expenses. The balance is primarily comprised of legal, wages and management fee costs. General & Administrative (G&A) expenses totaled $30,000 during the first quarter of 1999 as compared to $32,876 in the year ago period, an decrease of 9%. This expense decrease of $2,876 was mainly due to the delectation of certain key management personnel since the first quarter of 1999. The Company did not record any tax expense during the current quarter or comparable year-ago period due to tax loss carry forwards. The Company's tax loss carryforward balance at the end of fiscal 1998 was in excess of $6 million and, as such, the Company does not expect to incur any federal income tax liability until this carryforward is depleted by operational profits. Net loss for the first fiscal quarter of 1999 was $186,279 which equated to loss per share of ($.03) Net loss for the comparable quarter of 1998 was $169,407 which equated to loss per share of ($0.03). Virtually all losses was due to termination of the Jaycees lease and renovation of property in Piedmont, Alabama which was not open in the first quarter of 1998. Management believes that the Company's direct operating costs and G&A expenses are relatively fixed. As such, management will continue to seek expansion opportunities that offer incremental operating revenues which, in turn, favorably leverage the Company's net income performance. All of the Company's revenue comes from operation of the bingo hall or interest income on cash therefrom. The following table summarizes revenue categories in the Company's statement of income (rounded to the nearest whole dollar). Amount of Total Revenue Three Months Ended March 31, 1999 1998 --------- --------- Revenues: Bingo hall rent/administrative fees -0- $ -0- Kitchen and gift shop revenues -0- -0- Other Income -0- --------- Total Revenue $ -0- $-0- ========= ========= 9 In general, the Company experienced insignificant revenues in 1994 as it attempted to expand and develop its operations. At the end of 1994 the Registrant acquired a bingo hall, which it now leases to charities who sponsor bingo games. The Company also provides management services to assist the charities in the operations, for which the Company charges a fee. In late 1996, the Company was also requested to take over operations of the kitchen and gift shop portions of the facility. Except for the operation of the bingo hall, there are no other significant revenue sources of the Company at this time. In 1995, the Company charged a flat $75,000 per month in rent, plus management fees as deemed appropriate. In February, 1996, the lease with the current charity was amended to reflect a minimum payment of $25,000 per month, with adjustments up to $75,000 per month if the charity generates sufficient annual cash flow to afford to pay the increased rent. Although the charity generated cash flow that would allow greater rent, management allow such excess to be applied toward unpaid rents and did not increase the rent charge for 1996. However, the company did received $61,033 additional rents in 1997. Management collected no rent payments for three months ended March 31, 1998. Management has collect no revenues for first quarter 1999 from the Piedmont facility. Management believes that due to competition and geographic factors, change in the local regulations, which states that charity member and employees cannot be paid, the local charity will not be able to operate and pay its obligations under the lease agreement and therefore in January of 1998 the lease with the Piedmont Jaycees was terminated. LIQUIDITY AND CAPITAL RESOURCES At March 31, 1999, the Company had cash and cash equivalents of $ 0.00 a decrease of $83,812 from the end of fiscal 1998. The decrease was due to renovation of the facility and will not be able to rent the facility until August of 1999. The Company does expect to make further investments in its Piedmont, Alabama facility in order to meet strong customer demands and requirement of under the new leases. The Company expects its cash position to begin to increase assuming leases are place and the Company's Internet website is operational. There can be no assurance of the foregoing. The Company intends to finance future acquisitions primarily through the use of stock and, to a lesser extent, cash and notes. Accounts receivables totaled $ -0- at March 31, 1999. The Company had no revenues as of March 31, 1999. Current liabilities totaled $1,867,950 at the end of the quarter, but less than 10% of this total represented trade payables. Approximately 60% of total liabilities are comprised of a note payable which currently is due and payable. The Company has no other long-term debt. The Company had total assets of over $7.6 million and total liabilities of $1,867,950.00 at the end of the first quarter, with shareholder equity of $5.8 million. The Company believes that its current capital resources, together with expected positive operational cash flows and note collections, will support operational requirements for the next year. 10 PART II--OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS On April the 28th 1995 the State of Alabama place a tax lien on the previous owner, Cranberry-Magnetite for admission taxes, in the amount of $750,000.00. The company did receive a warranty deed from Cranberry Magnetite. After a legal action by Cranberry Magnetite failed in 1998 the company paid this tax liability on behalf of Cranberry Magnetite. The company will take legal action to recover these funds. In April of 1995 one of the employees of the company's subsidiaries (SBI Communications, Inc. of Alabama) was named as a defendant in a legal action in Alabama. This action alleges that the defendant's bingo game which was operate by the charity; 1) comprise a illegal lottery, which violates the state constitution; 2) further comprise that the equipment (a computer) was an illegal gaming device. After appeals to Circuit and State Supreme court failed, the defendants were incarcerated and later place on 24 months probation which will end November 14th 1999. This was a misdemeanor and a first offence. The Company believes that this action was completely without merit and did defend vigorously. ITEM 2. CHANGES IN SECURITIES In July, 1996, 5,000 shares of preferred stock with a par value of $25,000 were to be issued to cover $20,000 in closing costs relating to the mortgage note receivable. The Company inadvertently issued 25,000 shares rather than 5,000 shares, and both parties agreed that the related certificate would be returned and reissued. In the first quarter of 1997, the certificate was returned, and a new certificate for 5,000 shares was issued. In January 1998 the Company issued 25,000 shares of its common stock to cover the cost of software programing relating to PandaAmerica. The Company also converted 40,000 shares of preferred shares to 200,000 shares of the company common stock. ITEM 3. DEFAULTS UPON SENIOR SECURITIES Not applicable. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable. ITEM 5. OTHER INFORMATION CHANGE IN MANAGEMENT. SBI is unaware of any contract or other arrangement of which may at a subsequent date result in a change in control of SBI 11 IMPACT OF THE YEAR 2000 The year 2000 risk is the result of computers being written using two digits rather than four digits to define the applicable year. Computer programs that have sensitive software may recognize a date using "00" as the year 1900 rather than the year 2000. As a result, computer systems and/or software used by many companies and government agencies may need to be upgraded to comply with year 2000 requirements or risk systems or miscalculations causing disruptions of normal business activities. STATE OF READINESS Based on as internal assessment, SBI believes that its software programs, both those development internally and purchased from material outside vendors, are year 2000 compliant or will be by December 31st 1999. SBI began assessing its state of year 2000 readiness during September 1998. This included reviewing the year 2000 compliance of the following: - SBI internally developed proprietary software incorporated in the SBI broadcast bingo and Internet programs; - Third-party software vendors; SBI will continue to require its vendors of material hardware and software to provide assurances of their year 2000 compliance. COSTS To date, SBI has incurred approximately $30,000.00 of costs in identifying and evaluating year 2000 compliance issues. Most of SBI expenses have related to. And expected to continue ro relate to the operating costs associated with time spent by employees in the evaluation year 2000 compliance matters. At this time, SBI does not possess the information necessary to estimate the potential costs of future revision to software relating to the SBI programs should revision by required of the replacement of third-party software, hardware of services, if any, that are determined to not be year 2000 compliant. Although SBI believes that its software programs, both development internally and purchased from outside vendors are either already year 2000 compliant or will be by December 31st, 1999,. Failure to identify non year 2000 compliant software could have a material and adverse effect on SBI's business, results of operations and financial condition. RISKS SBI is not currently aware of any significant year 2000 compliance problems relating to the broadcast or Internet or other software systems that would have a material and adverse effect on business, results of operations and financial condition. EXHIBITS AND REPORTS ON FORM 8-K ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (A) EXHIBITS: EXHIBITS DESCRIPTION 11 Statement re: computation of per share earnings 27 Financial data schedule (B) REPORTS ON FORM 8-K: None 12 SIGNATURES 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, hereunto duly authorized. SBI Communications, Inc. Date: July 14, 1998 By: /s/Ronald Foster ------------------------------------- Ronald Foster Chairman of the Board and Chief Executive Officer (principal executive officer) 13 EX-11 2 EXHIBIT 11 SBI COMMUNICATIONS, INC. COMPUTATION OF EARNINGS PER COMMON SHARE FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1999 Three Months Three Months Ended Ended March 31, 1998 March 31, 1999 -------------- -------------- Shares outstanding: 5,570,439 5,570,439 Weighted average shares outstanding 5,570,439 5,570,439 Net loss $ (169,407) $ (186,279) Preferred Dividend -- -- -------------- -------------- Total (169,407) (186,279) Net loss per share $ (0.03) $ (0.03) EX-27 3
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS OF SBI COMMUNICATIONS, INC. FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO TO SUCH FINANCIAL STATEMENTS. 3-MOS DEC-31-1999 MAR-31-1999 0 0 0 0 79,444 83,529 7,458,345 88,539 7,610,010 1,867,950 1,050,000 0 8,265,000 5,570 5,852,862 7,610,010 0 0 0 118,069 0 0 131,061 (186,279) 0 (186,279) 0 0 0 (186,279) (0.03) 0
-----END PRIVACY-ENHANCED MESSAGE-----