-----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, Fl/eG98p6jBYHwCnrkT2R7zDJOeNtBTYpjWkl2K1gO/T6iOj44WtSb1sNOz3JFqE z7TvMY/KhR2d+p99RKDGBA== 0001013453-99-000001.txt : 19991206 0001013453-99-000001.hdr.sgml : 19991206 ACCESSION NUMBER: 0001013453-99-000001 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991203 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: 99768390 BUSINESS ADDRESS: STREET 1: 1239 S GLENDALE AVE CITY: GLENDALE STATE: CA ZIP: 91205 BUSINESS PHONE: 9127599176 MAIL ADDRESS: STREET 1: 103 FIRETOWER RD CITY: LEESBURG STATE: GA ZIP: 31763 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 September 30, 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 (IRS Employer Identification Nunber) incorporation or organization) 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 September 30, 1998 the Registrant had 5,570,430 shares of its $0.001 par value Common Stock Outstanding. ============================================================================= November 15, 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 September 30, 1999 Consolidated Statements of Operations 4 for the nine months ended September 30, 1998 and 1999 Consolidated Statement of Changes 4 in Shareholders' Equity for the nine months ended September 30, 1999 Consolidated Statements of Cash Flows 5 for the nine months ended September 30, 1998 and 1999. Notes to Consolidated Financial State- 6 meats Item 2. Management's Discussion and Analysis 8 of Financial Condition and Results of Operations Condition Part II. OTHER INFORMATION Item 1. Legal Proceedings 12 Item 2. Changes in Securities 12 Item 3. Defaults Upon Senior Securities 12 Item 4. Submission of Matters to a Vote 12 of Security Holders Item 5. Other Information 12 Item 6. Exhibits and Reports on Form 8-K 13 Signatures 13 2 PART I. FINANCIAL INFORMATION Financial Statements SBI COMMUNICATIONS, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS (UNAUDITED)
Sept. 30, Dec. 31, 1999 1998 ASSETS Current assets: Cash $ 485 $ 485 Accounts receivable, - - 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 $7,610,557 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 1,653,000 shares issued and outstanding at September 30, 1999 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 Sept. 30, 1999 and 5,570,439 as of December 31, 1998 5,570 5,570 Paid in capital 3,667,118 3,66,118 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 STATEMENTS OF LOSS Three Months Nine Months Ended Sept. 30, Ended Sept. 30,
1999 1998 1999 1998 Revenues: Bingo hall rent - $ - - - Kitchen and gift shop revenues - - - - Other income - - 593 593 - 593 593 Expenses: Cost of sales - kitchen and gift shop - - - - Administrative salaries and related expenses 35,000 35,000 73,133 73,133 Facility cost 12,260 12,260 22,971 22,971 Other general and administrative 31,212 31,212 65,098 65,098 Production costs - - - - Depreciation and amortization 8,019 8,019 88,539 88,539 Interest and finance expenses 24,311 24,311 31,061 31,061 ___________________________________________________________________________ 110,802 110,802 ($ 280,802) ($280,802) ___________________________________________________________________________ Net loss ($110,802) (110,802) ($ 280,209) ($280,209) Net loss per share $__0.02) ($ 0.02 ($ 0.05) ($ 0.05)
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, (UNAUDITED) 1999 1998 Revenues: Bingo hall rent $ - $ - Kitchen and gift shop revenues - - Other income 593 593 _________________________________________________________________________ 593 593 Expenses: Cost of sales - kitchen and Gift shop - - Administrative salaries and related expenses 73,133 73,133 Facility costs 22,971 22,971 Other general and administrative 65,098 65,098 Production costs - - Depreciation and amortization 88,539 88,539 Interest and finance expenses 31,061 31,061 ________________________________________________________________________ 280,802 280,802 Net loss ($ 280,209) ($ 280,209) Net loss per share ($ 0.05) ($ 0.05)
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)
1999 1998 Cash flows from operating activities: Net (loss) ($ 280,209) ($ 280,209) Adjustments to reconcile net loss to cash provided (used) by operating activities: Depreciation and amortization 72,500 72,500 Amortization of deferred loan costs 16,038 16,309 Charge offs of long-term receivables - - Change in accounts receivable, trade 768 768 Change in inventories 6,621 6,621 Change in prepaid expenses - - Change in accounts payable and 83,629 83,629 __________ _________ Cash (used) by operating activities( 100,653) (100,653) Cash flows from investing activities: Proceeds from repayment of notes receivable from affiliate 5,499 5,499 Purchase of real estate ( 748,622) ( 748,622) Cash (used) by investing activities ( 743,123) ( 743,123) Cash flows from financing activities: Loans from shareholders/affiliates 12,698 12,698 Proceeds From Mortgaged (see note 5) $1,050,000 $1,050,000 Mortgage loan repayments ( 239,701) (239,701) Capital lease repayments ( 964) ( 964) Cash flows provided by financing activities $822,033 $822,033 Net increase (decrease) in cash ( 21,743) ( 21,743) Cash at beginning of period 22,228 22,228 Cash at end of period $ 485 $ 485 Supplemental information: Income taxes paid - $ - Interest paid 28,311 $ 28,311 Items not requiring use of cash: Preferred stock converted ($0.00) ($200,000) Issuance of common stock $0.00 200.000 Paid in capital $ - $ -
See accompanying notes to consolidated financial statements. 5 SBI COMMUNICATIONS, INC. AND SUBSIDIARY NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 1999 AND DECEMBER 31, 1998 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 six months ended September 30, 1999 and 1998 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 discl osure 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 $97,500. for the three quarters ended September 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 quarters ended June 30, 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. 6 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. 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. 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.Wnet1.com, http://www.bingo2k.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 Mobile Home Factory Outlet Center, Inc. of Panama City, Florida to purchase the Piedmont property for $7,300,000.00. 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. Mobile Home Factory Outlet Center, Inc. plans to have an Mobile Home Manufacturing Plant and Sales outlet at the Piedmont location. Plans are to employ approximately 250 to 300 employees. SBI has enter into a purchase agreement to purchase an additional eighteen (18) acres of land directly adjoining it's property in order to make available a total of thirty-five acres to Mobile Home Factory Outlet Center. The total purchase with the additional land is $7,300,000.00. 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.net - http:/www.sbicom.com - - http://www.Wnet1.com, http//www.bingo2k.com, http://www.globalot.com - http://www.sbicommunications.com - http://www.frontierpalace.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 Panama City, Florida group, for the operation of a mobile home plant and sales outlet. 8 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 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 no bingo center. 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 other bingo centers by end of 1999. RESULTS OF OPERATION NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 1998. The Company generated revenues of $ 593 during its second fiscal quarter end September 30, 1999, as compared to $593 in the comparable period of the prior fiscal year, which represents no change. The Company expects quarterly revenues to continue to increase upon the successful operation of the Company's Web site, new leases of the company property in Piedmont and broadcas ting of it's interactive programming. Direct operating costs of the Company's Piedmont facility totaled $110,802 during the third quarter of 1999 versus $110,802 in the comparable 1998 quarter, which represents no change. Approximately 35% 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 $35,000 during the third quarter of 1999 as compared to $35,000 in the year ago period. This expense decrease of $0.00 was mainly due to no operations and renovation during the first and second 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 third fiscal quarter of 1999 was $110,209, which equated to loss per share of ($0.02) Net loss for the comparable quarter of 1998 was $110,802 which equated to loss per share of ($0.02). Virtually all of the loss was due to no operations in second quarter of 1999. Management believes that the Company's direct operating costs and G&A expenses are relatively low for this quarter. 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 in the past has come from operations 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). 9
Amount of Total Revenue Nine Months Ended September 30, 1999 1998 Revenues: Bingo hall rent/administrative fees .00 .00 Kitchen and gift shop revenues .00 .00 Other Income 593 593 Total Revenue $593 $593
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 of the bingo games, 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 1997. Management collected no rent payments and had no revenue for nine months ended September 30, 1999. LIQUIDITY AND CAPITAL RESOURCES At September 30, 1999, the Company had cash and cash equivalents of $485.00, a decrease of $0.00 from the end of fiscal 1998. The decrease was mainly due to renovation of the property and not being able to operate the facility. The Company does expect to make further investments in its Piedmont, Alabama facility in order to meet customer demands and renovate as required by the sell for the facility. The Company intends to finance future acquisitions primarily through the use of stock and, to a lesser extent, cash and notes. The Company paid a tax liability owed to the State of Alabama that the previous owners did not pay. This debt is due the Company and the company plans to recover these funds by all legal means available to the company. 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 to the Haulmark Company for a loan the company received in order to pay the previous owners tax liability. Approximately 20% of long-term note payable on which the Company is currently making payments. The Company has no other long-term debt. The Company had total assets of over $7.6 million and total liabilities of $1.9 million at the end of the third 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/Broadway Gas Corporation for admission taxes, in the amount of $750,000.00 plus 12% interest. The company received a warranty deed from Cranberry Magnetite. After a legal action by Cranberry Magnetite with the State of Alabama failed in 1998 the company paid this tax liability on behalf of Cranberry Magnetite/Broadway Gas Corporation. The company will take any and all legal action to recover these funds. In April of 1995 two of the employees of the company's subsidiaries (SBI Communications, Inc. of Alabama) were named as defendants 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 for both defendants. 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 NO CHANGE IN MANAGEMENT. 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, thereunto duly authorized. SBI Communications, Inc. Date: November 15, 1999 By: /s/Ronald Foster ------------------------------------- Ronald Foster Chairman of the Board and Chief Executive Officer (principal executive officer) 13 EX-11 2 COMPUTATION OF PER SHARE EARNINGS EXHIBIT 11 SBI COMMUNICATIONS, INC. COMPUTATION OF EARNINGS PER COMMON SHARE FOR THE NINE MONTHS ENDED SEPTEMBER 30 , 1998 AND 1999 Nine Months Nine Months Ended Ended Sept. 30, 1998 Sept. 30, 1999 -------------- -------------- Shares outstanding: 5,570,439 5,570,439 Weighted average shares outstanding 5,570,439 5,570,439 Net loss $ (280,209) $ (280,209) Preferred Dividend -- -- -------------- -------------- Total (280,209) (280,209) Net loss per share $ (0.05) $ (0.05) 14 EX-27 3 FINANCIAL DATA SCHEDULE WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 9-MOS DEC-31-1999 SEPT-30-1999 485 0 0 0 79,444 83,529 7,458,345 88,538 7,610,010 817,950 1,050,000 0 8,265,000 5,570 5,742,060 7,610,010 0 593 0 * 182,168 0 0 31,061 (280,209) 0 (280,209) 0 0 0 (280,630) (0.05) (0.05)
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