-----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, R7lQh+leSqyaCZXPpf/trnZJzLtk5604a9SIQdYSQ+wnwrWIQinecq2lCWv6lOdb opEd8eLIRLgv+bK+qCAI6g== 0001013453-00-000016.txt : 20000522 0001013453-00-000016.hdr.sgml : 20000522 ACCESSION NUMBER: 0001013453-00-000016 CONFORMED SUBMISSION TYPE: 10QSB/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000519 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/A SEC ACT: SEC FILE NUMBER: 000-28416 FILM NUMBER: 639910 BUSINESS ADDRESS: STREET 1: 1239 S GLENDALE AVE STREET 2: SUITE 104 CITY: GLENDALE STATE: CA ZIP: 91205 BUSINESS PHONE: 8185506148 MAIL ADDRESS: STREET 1: 103 FIRETOWER RD STREET 2: SUITE 104 CITY: LEESBURG STATE: GA ZIP: 31763 10QSB/A 1 SBI COMMUNICATIONS, INC. - 10QSB/A Securities and Exchange Commission Washington, D.C., 20549 FORM 10-QSB/A (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, 2000 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 (IRS Employer incorporation or organization) Identification Number) 1239 South Glendale Avenue, Glendale California 91205 ----------------------------------------------------- (Address of Principal executive offices) (Zip code) (818) 550-6181 -------------- 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 March 31, 2000 the Registrant had 5,870,439 shares of its $0.001 par value Common Stock Outstanding. =============================================================================== May 3, 2000 =============================================================================== INDEPENDENT ACCOUNTANTS' REPORT ------------------------------- We have reviewed the accompanying consolidated balance sheet, statement of operations, and cash flows of SBI Communications, Inc., and subsidiaries as of March 31, 2000, and for the three-months period then ended. These financial statements are the responsibility of the company's management. We conducted our review in accordance with standards established by the American Institure of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally acce[ted auditing standards, the objective of which is the expression of an opinion reguarding the financial statements taken as a whole. Accorkingly, we do not express such as opinion. Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements for them to be conformity with generally accepted accounting principles. /s/ Jay J. Shapiro, CPA P.C. JAY J. SHAPIRO, C.P.A. a professional corporation May 17, 2000 Encino, California
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, 1999 and and March 31, 2000 Consolidated Statements of Operations 4 for the three months ended March 31, 1999 and 2000 Consolidated Statement of Changes 4 in Shareholders' Equity for the three months ended March 31, 2000 Consolidated Statements of Cash Flows 5 for the three months ended March 31, 1999 and 2000 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 9 Item 2. Changes in Securities 10 Item 3. Defaults Upon Senior Securities 10 Item 4. Submission of Matters to a Vote 10 of Security Holders Item 5. Other Information 10 Item 6. Exhibits and Reports on Form 8-K 10 Signatures 11
2 PART I. FINANCIAL INFORMATION Financial Statements SBI COMMUNICATIONS, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS
(Unaudited) (Audited) March 31, Dec. 31, 2000 1999 ASSETS Current assets: Cash $ 71,580 $ -0- Accounts receivable, -0- -0- Note receivable from affiliates -0- -0- Inventories -0- -0- -------- -------- 71,580 -0- Property and equipment, at real sale value: $ 3,940,000 $ 3,940,000 Other assets: Fixed Assets: 7,500 -0- ------------ ------------ $ 4,019,080 $ 3,940,000 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Note payable $ 150,000 -0- 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 Equipment note payable current portion 131,181 131,181 Accrued wages due to principal shareholder (Note 2) 550,000 550,000 Advances due to principal shareholder 12,698 12,698 Accrued interest payable 229,000 199,000 ---------- ---------- 2,272,879 2,092,879 Accounts Payable 50,000 58,000 ---------- ---------- Total liabilities $2,322,879 $2,150,879 ----------- ----------- Stockholders' equity: Preferred stock, par value $5.00; 10,000,000 shares authorized; 153,000 and 153,000 shares issued and outstanding at March 31, 2000 and December 31, 1999, respectively $765,000 $765,000 Common stock, par value $.001; 40,000,000 shares authorized; 5,870,439 shares issued and outstanding at March 31, 2000 and 5,570,439 as of December 31, 1999 5,870 5,570 Paid in capital 3,611,518 3,559,318 Accumulated deficit ( 2,686,187) ( 2,540,767) ------------- ------------ 1,696,201 1,789,121 ------------- ------------ $ 4,019,080 $ 3,940,000
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)
2000 1999 Revenues: Facility rental $ -0- $ -0- Other income - -0- -0- -0- Expenses: Facility costs -0- -0- Other general and administrative 115,420 32,500 Production costs -0- -0- Interest and finance expenses 30,000 30,000 ----------- --------- 145,420 62,500 ----------- --------- Net loss ($ 145,420) ($ 62,500) =========== ========= Net loss per share $ (0.02) $ (0.01) =========== =========
SBI COMMUNICATIONS, INC. AND SUBSIDIARY CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Balance December 31, 1999 Additional Common Preferred Paid-in Accumulated Shares Amount Shares Amount Capital Deficit 5,570,439 $5,570 153,000 $765,000 $3,559,318 ($2,540,767) Net loss for 3 months ended March 31, 2000: (92,920) Shares Issued for services: 300,000 $ 300 $ 52,200 $(52,500) ---------- $ (145,420) - --------- -------- -------- --------- ----------- ------------- 5,870,439 $ 5,870 153,000 $765,000 $3,611,518 ($2,686,187)
See accompanying notes to consolidated financial statements. 4 SBI COMMUNICATIONS, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, (UNAUDITED)
2000 1999 ------ ------ Cash flows from operating activities: Net (loss) ($ 145,420) ($62,500) Adjustments to reconcile net loss to cash provided (used) by operating activities: Stock issued for services: $ 52,500 -0- Change in accounts payable and accrued expenses: 22,000 30,000 --------- ----------- Cash (used) by operating activities: ($ 74,500) ($ 30,000) Cash flows from investing activities: Proceeds from repayment of notes receivable from affiliate: -0- -0- Purchase of fixed assets: (7,500) -0- Cash (used) by investing activities: -0- -0- --------- --------- (7,500) -0- Cash flows from financing activities: Loans from shareholders/affiliates: 150,000 -0- ---------- --------- Cash flows provided by financing activities: $ 150,000 -0- Net increase (decrease) in cash $ 71,580 -0- Cash at beginning of period: -0- -0- ----------- --------- Cash at end of period: $ 71,580 $ -0- ============ =========== Supplemental information: Income taxes paid: $ - $ - Interest paid $ -0- $ 24,311 ============ =========== Items not requiring use of cash: Preferred stock converted: $ -0- $ -0- Issuance of common stock: 300,000 -0- Paid in capital: $ -0- -0-
See accompanying notes to consolidated financial statements. 5 SBI COMMUNICATIONS, INC. AND SUBSIDIARY NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2000 AND DECEMBER 31, 1999 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 audited financial statements. These unaudited consolidated financial statements should be read in conjunction with the consolidated audited financial statements and the footnotes thereto contained in the Form 10-KSB for the year ended December 31, 1999 of SBI Communications, Inc. (the "Company"), as filed with the Securities and Exchange Commission. The March 31, 2000 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, 2000 and 1999 are not necessarily indicative of the results to be expected for the full year. There were no activity in the first 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 $32,500 for the quarter ended March 31, 1999 and no accrued salaries for 2000, 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 5,870,439 and 5,570,439 weighted average shares outstanding for each of the quarter ended March 31, 2000 and December 31, 1999, respectively. Although convertible preferred stock is a common stock equivalent, with a conversion rate of each specific series of preferred share to common, preferred stock conversion has not been included in the calculation of earnings per share in that to do so would be antidilutive. 6 Note 4 - Mortgage The company borrowed $1,050,000.00 to pay State of Alabama, on behalf of Cranberry-Magnetite/Broadway Gas Company, the previous owner tax liability. The Company expects to pay this obligation from the proceeds of the sale of the Piedmont real estate of $3,940,000. 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 2000. The Company plans 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.bingo2k.com, http://www.sbicommunications.com, http://www.globalot.com, http://www.wnet1.com, and http://www.frontierpalace.com. Currently, the Company's is developing its web site and has a sales for the Alabama property. Management of it's wholly owned subsidiary (SBI Communications, Inc. of Alabama) has a signed purchase agreement with The Brindlee Mountain Castle Corporation of Arab, Alabama to purchase the Piedmont property for $6,000,000.00. The sale of this property should be closed with-in the next thirty days with net proceeds of $3,940,000. Management is also working in the panhandle of North West Florida area and believes that the local charity Bingo market is more hospitable in this area of Florida, rather than northeast Alabama. The company plans to open a facilities in the SoutheastFlorida and Maryland area to lease to local charities to conduct bingo games. 7 Intenet 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, travels 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.bingo2k.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. The Company believes that the $7 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 World Wide Web Site that includes a 24/7 Bingo gaame and othe other membership services. The Company believes that its industry experience, economies of scale and financial resources will provide a competitive advantage over competing bingo web sites 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 through acquisitions and developments in other selected markets throughout the United States. Management's goal is to open one or two other bingo centers by end of 2000. RESULTS OF OPERATION THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THREE MONTHS ENDED MARCH 31, 1999. The Company generated revenues of $-0- during its first fiscal quarter ended March 31, 2000, as compared to $-0- in the comparable period of the prior fiscal year. The no revenue for this period due to renovation of facility in Piedmont and building the company's Web Site. 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 totaled $145,420 during the first quarter of 2000 versus $62,500 in the comparable 1999 quarter, which represents a 230% increase. Approximately 60% of the current period's direct operating costs were comprised of the development of the company's web site, which are not fixed expenses. The company's web site is located at www.frontierpalace.com. The balance is primarily comprised of legal, wages and management fee costs. The end of the first Quarter of 1999 was the last bingo operation of the Piedmont facility for the company. 8 General & Administrative (G&A) expenses totaled $115,420 during the first quarter of 2000 as compared to $62,500 in the year ago period, an increase of 85%. This expense increase of$82,920 was mainly due to the development of the company's web site first quarter of 2000. 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 1999 was in excess of $9 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 2000 was $145,420 which equated to loss per share of ($.02) Net loss for the comparable quarter of 1999 was $62,500 which equated to loss per share of ($0.01). Virtually all losses was due to the development of the Company's web site. 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. LIQUIDITY AND CAPITAL RESOURCES At March 31, 2000, the Company had cash and cash equivalents of $ $71,580 a increase of $71,580 from the end of fiscal 1999. The increase was due to The Company acquiring a loan for $150,000 with terms of 10% interest for one year. Company does not expect to make further investments in its' Piedmont, Alabama facility and has sold to The Brindlee Mountain Castle Corporation for $6,000,000 of cash and stock. 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, 2000. The Company had no revenues as of March 31, 2000. Current liabilities totaled $2,322,878 at the end of the quarter, but less than .05% 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 $4.1 million and total liabilities of $1,500,000.00 at the end of the first quarter, with shareholder equity of $3.6 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. PART II--OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS NONE 9 ITEM 2. CHANGES IN SECURITIES In February the Company issued 200,000 shares of common stock for consideration of $40,000.00 for a loan to the Company. In January the Company issued 100,000 shares of common stock to a individual for cash of $5,000 and services of $7,500. 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. NONE 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 did not incur any problem with its software programs, both those development internally and purchased from material outside vendors. SBI will continue to require its vendors of material hardware and software to provide assurances of their year 2000 compliance. RISKS SBI is not currently aware of any significant year 2000 compliance problems relating to the broadcast, 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: March 29, 2000 10 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, thereunto duly authorized. SBI Communications, Inc. Date: May 3, 2000 By: /s/Ronald Foster ------------------------------------- Ronald Foster Chairman of the Board and Chief Executive Officer (principal executive officer) 11 EX-11 2 COMPUTATION OF PER SHARE EARNINGS EXHIBIT 11 SBI COMMUNICATIONS, INC. COMPUTATION OF EARNINGS PER COMMON SHARE FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999 Three Months Three Months Ended Ended March 31, 2000 March 31, 1999 -------------- -------------- Shares outstanding: 5,870,439 5,570,439 Weighted average shares outstanding 5,870,439 5,570,439 Net loss $ (145,420) $ (62,500) Preferred Dividend -- -- -------------- -------------- Total ( 145,420) (62,500) Net loss per share $ (0.02) $ (0.01) EX-27 3 FINANCIAL DATA SCHEDULE
5 Exhibit 27 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS OF SBI COMMUNICATIONS, INC. FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000 IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS DEC-31-2000 MAR-31-2000 71,580 0 0 0 0 4,140,080 3,940,000 0 4,140,716 2,322,879 1,200,000 0 765,000 5,870 1,696,201 4,019,080 0 0 0 115,420 0 0 229,000 0 0 0 0 0 0 (145,920) (0.02) 0
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