-----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, Jpm4jLNaBWo0OWr/ycP6XeM9vfMo7cngHs1ruRr8J1uTap+EsXZ5p4ATSXjGKmgA OJB/Jo+OWt81BgXM6oY4iw== /in/edgar/work/0001013453-00-000043/0001013453-00-000043.txt : 20001027 0001013453-00-000043.hdr.sgml : 20001027 ACCESSION NUMBER: 0001013453-00-000043 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001026 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SBI COMMUNICATIONS INC CENTRAL INDEX KEY: 0001013453 STANDARD INDUSTRIAL CLASSIFICATION: [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: 746500 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 1 0001.txt SBI COMMUNICATIONS, INC. - 10QSB 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 September 30, 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 September 30, 2000 the Registrant had 13,770,878 shares of its $0.001 par value Common Stock Outstanding. =============================================================================== October 23, 2000 ===============================================================================
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 September 30, 2000 Consolidated Statements of Operations 4 for the three and Nine months ended September 30, 1999 and 2000 Consolidated Statement of Changes 4 in Shareholders' Equity for the nine months ended September 30, 2000 Consolidated Statements of Cash Flows 5 for the nine months ended September 30, 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 - ----------------------------- 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 September 30, 2000, and for the three-months and nine-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. Accordingly, 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 October 20, 2000 Encino, California Financial Statements - -------------------- SBI COMMUNICATIONS, INC. AND SUBSIDIARY --------------------------------------- CONSOLIDATED BALANCE SHEETS ---------------------------
(Unaudited) (Audited) Sept. 30, Dec. 31, 2000 1999 ---- ---- ASSETS ------ Current assets: Cash $ 22,542 $ -0- Inventory 20,500 -------- -------- 44,541 -0- Property and equipment, at real sale value: $ 4,015,000 $ 3,940,000 Other assets: Fixed Assets: 20,500 -0- ------------ ------------ $ 4,080,041 $ 3,940,000 LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Current liabilities: Note payable to trust managed by a shareholder $ 150,000 $ 150,000 Mortgage note payable 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 295,000 12,698 Accrued interest payable 299,000 199,000 Accounts Payable 76,000 58,000 ---------- ---------- Total liabilities $2,551,181 $2,150,879 ----------- ----------- Stockholders' equity: Preferred stock, par value $5.00; 10,000,000 shares authorized; 43,000 and 153,000 shares issued and outstanding at Sepetember 30, 2000 and December 31, 1999, respectively; $215,000 $765,000 Common stock, par value $.001; 40,000,000 shares authorized; 13,770,878 shares issued and outstanding at September 30, 2000 and 5,570,439 as of December 31, 1999 6,885 5,570 Paid in capital 4,294,568 3,559,318 Accumulated deficit ( 2,987,593) ( 2,540,767) ------------- ------------ 1,528,860 1,789,121 ------------- ------------ $ 4,080,041 $ 3,940,000
See accompanying notes to consolidated financial statements. 3 SBI COMMUNICATIONS, INC. AND SUBSIDIARY --------------------------------------- CONSOLIDATED STATEMENTS OF OPERATIONS ------------------------------------- FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, ------------------------------------------- (UNAUDITED) ----------- Nine Months Ended Sept. 30, Three Months Ended Sept. 30, --------------------------- --------------------------
2000 1999 2000 1999 ---- ---- ---- ---- Revenues: Revenues $ -0- $ -0- $ -0- $ -0- Expenses: General and administrative 289,335 98,000 112,188 33,500 Website Development 102,491 -0- 38,000 -0- Interest and finance expenses 100,000 120,000 35,000 40,000 ---------- -------- --------- -------- 491,826 218,000 185,188 73,000 ---------- -------- --------- -------- Net loss ($ 491,826) ($ 218,000) (185,188) ($ 73,000) =========== ========== ========= ========== Net loss per share $ (0.04) $ (0.02) $ (0.01) $ (0.00) =========== ========== ========= =========
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 ------ ------ ------ ------ ------- ------- 11,140,878 $5,570 153,000 $765,000 $3,559,318 ($2,540,767) Net loss for 9 months ended Sept. 30, 2000: (350,261) Shares Issued for services: 1,130,000 $ 565 $ 141,000 $(141,565) Shares Issued for Cash: 400,000 200 44,800 45,000 - --------- -------- -------- --------- ----------- ------------- conversion of prefered stock 1,100,000 560 (110,000) (550,000) 549,450 5 - --------- -------- -------- --------- ---------- ------------- 13,770,87 $ 6,885 43,000 $215,000 $4,294,568 ($2,987,593)
See accompanying notes to consolidated financial statements. 4 SBI COMMUNICATIONS, INC. AND SUBSIDIARY --------------------------------------- CONSOLIDATED STATEMENTS OF CASH FLOWS ------------------------------------- FOR THE NINE MONTHS ENDED SEPTEMBER 30, --------------------------------- (UNAUDITED) -----------
2000 1999 ------ ------ Cash flows from operating activities: Net (loss) ($ 491,826) ($218,000) Adjustments to reconcile net loss to cash provided (used) by operating activities: Stock issued for services: $141,565 -0- Increase in accounts payable: 120,000 218,000 Inventory 20,500 --------- ----------- Cash (used) by operating activities: ($209,761) $ -0- Cash flows from investing activities: Renovation Costs ( 75,000) -0- Purchase of fixed assets: ( 20,000) -0- ---------- --------- Cash flow (used) by finanicing activities ( 95,000) -0- Loans from shareholders/affiliates: 282,302 -0- Sale of common stock 45,000 -0- ---------- --------- Cash flows provided by financing activities: $ 327,302 -0- Net increase in cash $ 22,541 -0- Cash at beginning of period: -0- -0- ----------- --------- Cash at end of period: $ 22,541 $ -0- ============ =========== Supplemental information: Income taxes paid: $ -0- $ - Interest paid $ -0- $ 24,311 ============ =========== Items not requiring use of cash: Conersion of preferred stock 550,000 -0- ============= ===========
See accompanying notes to consolidated financial statements. 5 SBI COMMUNICATIONS, INC. AND SUBSIDIARY --------------------------------------- NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS ----------------------------------------------------- SEPTEMBER 30, 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 September 30, 2000 financial statememt 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 and nine months ended September 30, 2000 and 1999 are not necessarily indicative of the results to be expected for the full year. 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. In August 2000 the Company split its common stock 2 for 1. All financial data in these statements reflects the post-split basis. Note 2 - Related party transactions The Company accrued salaries payable to the Company's principal shareholder totaling $97,500 for the nine months ended September 30, 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 13,770,878 weighted average shares outstanding for ended September 30, 2000 and 11,140,878 for September 30, 1999 on a post split basis. 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 is delinquient on the repayment of this obligation. NOTE 5 - Subsequent Events In Octoer 2000, the Company entered into an agreement to issue 75,709,965 shares of common stock to acquire 100% ownership Valencia Entertainment International LLC ("Valencia"). This transaction will be treated as a reverse acquisition merger for accounting purposes. If the transaction would have taken pace as of January 1, 2000, the Company's proforma consolidated net assets would be $9,953,000, the shares outstanding 88,040,843 net income for nine months ended September 30, 2000 of $500,000, and net income per share of $0.00. 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. 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. The sale of this property in Piedmont, Alabama for net proceeds of $3,940,000, was pending as of June 30, 2000. Subsquent to June 30, 2000, the Company decided to develop the property as an Auto Auction (the "Auction") and cancelled the sale. The Company spent $75,000 for renovation of this property for the Auto Auction in September 2000. 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 Satellite 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 - The web site is hosted by the Company and the Company will provide its own fulfillment. 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. As discussed in Item 4 and Note 5 to the financial statements, the Company will issue 84.6 million shares of common stock to Valencia for 100% ownership of this company. Valencia had revenues and earnings of $1,474,000 and $401,000 and $1,272,000 and $212,000 for years ended December 31, 1999 and 1998. RESULTS OF OPERATION NINE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 1999. The Company generated revenues of $-0- during its first third fiscal quarter ended September 30, 2000, as compared to $-0- in the comparable period of the prior fiscal year. The Company expects to generate revenue upon the successful operation of the Company's Web site the broadcasting of its interactive programming, and the operations of Valencia. General and administrative costs of the Company's totaled $150,000 during the third quarter of 2000 versus $33,000 in the comparable 1999 quarter, which represents a 433% increase. Most of the current period's costs were comprised of the development of the company's web site, which are not fixed expenses. The balance is primarily comprised of professional and personal cost. The end of the first Quarter of 1999 was the last bingo operation of the Piedmont facility for the company and the Company was inactive after that date. The nine months ended September 30, 2000 reflects $294,000 increase over the 1999 period due to website development cost and professional fees. 8 Interest and financing cost totaled $35,000 during the third quater of 2000 as compared to $40,000 in the comparable 1999 period,and for the nine months ended September 30, 2000, such costs were $100,000 versus $120,000 for 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 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 nine months of 2000 was $492,000 which equated to loss per share of ($.04) Net loss for the comparable quarter of 1999 was $218,000 which equated to loss per share of ($0.02). Virtually all 2000 loss was due to the development of the Company's web site and the renovation of the Auction Plaza in Pidemont and professional fees. Including the third quarter loss of ($0.01) per share vs ($0.00) per share in the comparable 1999 quarter. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- At September 30, 2000, the Company had cash and cash equivalents of $22,541 a increase of $22,541 from the end of June 30, 2000. The increase was due to sale of stock and loan from principal shareholder less fiscal 2000 operating expenses. The Company expects its cash position to increase when the Company's Internet website is operational and Valencial is in full operation. 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. The Company has working capital deficit of $2.5 million at September 30, 2000. The Company believes that its current capital resources, together with expected positive operational cash flows and additional advances by major stockhokder, 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 400,000 shares of common stock for the repayment of $40,000.00 for a loan to the Company. In January the Company issued 200,000 shares of common stock to a individual for cash of $5,000 and services of $7,500. In June 2000, the Company issued for 400,000 shares consulting services rendered. In August 2000 the Company issued 130,000 shares for goods and services rendered. All 1,130,000 shares issued are valued at $0.25 per share. In addition, 400,000 shares were issued for $45,000 in cash. ITEM 3. DEFAULTS UPON SENIOR SECURITIES Not applicable. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS A preliminary proxy statement on schedule 14C proxy filing. Terms of proxy is as follows which has been approved by a majority of the companys shareholders. An informational statement will be provided to all current shareholders of the company. A. Acquisition of Valencia Intertainment International. B. Company will change its name to Val Com, Inc. C. Change the capital structure of the company from 40,000,000 common shares to 100,000,000 shares. D. Elect four directors to the board of directors. 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: July 20, 24, & 28 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: October 23, 2000 By: /s/Ron Foster ------------------------------------- Ron Foster, Chairman of the Board and Chief Executive Officer (principal executive officer) EX-11 2 0002.txt COMPUTATION OF PER SHARE EARNINGS EXHIBIT 11 SBI COMMUNICATIONS, INC. ------------------------ COMPUTATION OF EARNINGS PER COMMON SHARE ---------------------------------------- FOR THE NINE MONTHS ENDED ------------------------ SEPTEMBER 30, 2000 AND 1999 ----------------------
Nine Months Nine Months Ended Ended Sept. 30, 2000 Sept. 30, 1999 -------------- -------------- Shares outstanding: 5,570,439 Weighted average shares outstanding 13,770,878 11,140,878 Net loss ($ 491,826) ($ 218,000) Preferred Dividend -- -- -------------- -------------- Total ( 491,826) (218,000) Net loss per share $ (0.04) $ (0.02) -------------- --------------
EX-27 3 0003.txt FINANCIAL DATA SCHEDULE WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS 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 SEPTEMBER 30, 2000 IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 9-MOS DEC-31-2000 SEPT-30-2000 22,541 0 0 0 20,500 4,015,000 4,015,000 0 4,080,041 2,551,181 1,200,000 0 215,000 6,885 1,528,860 4,080,041 0 0 102,491 289,335 0 0 100,000 0 0 0 0 0 0 (491,826) (0.04) 0
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