-----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, AKQv2T5jp5B/qLTZFyOMpBTPVKJ+trDjat3RHiSDszhAniiSDPX9a/EtwrgroCyO dY/BIRtYjN1tyBLAtHGcqA== 0000950133-98-002052.txt : 19980525 0000950133-98-002052.hdr.sgml : 19980525 ACCESSION NUMBER: 0000950133-98-002052 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980522 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHOICES ENTERTAINMENT CORP CENTRAL INDEX KEY: 0000822935 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-VIDEO TAPE RENTAL [7841] IRS NUMBER: 521529536 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-17001 FILM NUMBER: 98630257 BUSINESS ADDRESS: STREET 1: 836 W TRENTON AVE STREET 2: STE 205 CITY: MORRISVILLE STATE: PA ZIP: 19067 BUSINESS PHONE: 2154281000 MAIL ADDRESS: STREET 1: 836 W TRENTON AVE CITY: MORRISVILLE STATE: PA ZIP: 19067 FORMER COMPANY: FORMER CONFORMED NAME: DATAVEND INC DATE OF NAME CHANGE: 19900401 10QSB 1 CHOICES ENTERTAINMENT CORPORATION FORM 10-QSB 1 U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------- FORM 10-QSB (Mark One) [X] Quarterly report under Section 13 or 15 (d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 1998 [ ] Transition report under Section 13 or 15 (d) of the Exchange Act For the transition period from _____________ to _____________ Commission file number 0-17001 Choices Entertainment Corporation - -------------------------------------------------------------------------------- (Exact Name of Small Business Issuer as Specified in Its Charter) Delaware 52-1529536 - ------------------------------- ------------------------------------ (State or Other Jurisdiction of (I.R.S. Employer Identification No.) Incorporation or Organization) 509 Kinsale Road, Timonium, Maryland 21093 - ------------------------------------ --------- (Address of Principal Executive Offices) (Zip code) Issuer's Telephone Number, Including Area Code 410-643-2967 ------------
214 Queen Anne Club Drive, Stevensville, Maryland 21666 - -------------------------------------------------------------------------------- (Former Name, Former Address and Former Fiscal Year, if Changed Since last Report) Check whether the issuer: (1) filed all reports required to be filed by Section 13 or15 (d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes _ X___ No ____ State the number of shares outstanding of the issuer's Common Stock, as of May 15, 1998: 22,004,395 Transitional Small Business Disclosure Format (check one): Yes ____ No __X__ 2 Part I: FINANCIAL INFORMATION Item 1. Financial Statements CHOICES ENTERTAINMENT CORPORATION BALANCE SHEETS
March 31, 1998 December 31,1997 -------------- ---------------- (Unaudited) (Audited) ASSETS Current assets: Cash $ 27,326 $ 197,117 Accounts receivable 30,000 1,123 ------------------ ----------------- Total current assets 57,326 198,240 Equipment, net 3,389 3,631 Other assets 125 125 ------------------ ------------------ $ 60,840 $ 201,996 ================== ================= LIABILITIES AND STOCKHOLDERS' DEFICIT - ------------------------------------------------- Current liabilities: Accounts payable $ 9,722 $ 33,104 Accrued merger and acquisition expenses 353,799 353,799 Accrued professional fees 51,230 129,758 Accrued salaries 2,859 Other accrued expenses 5,000 5,419 ------------------ ----------------- Total current liabilities 419,751 524,938 ------------------ ----------------- Stockholders' deficit: Preferred stock, par value $.01 per share: Authorized 5,000 shares: 109 shares issued and outstanding in 1998 and 1997 Common stock, par value $.01 per share: Authorized 50,000,000 shares: issued and outstanding 22,004,395 shares in 1998 and 1997 220,044 220,044 Additional paid-in-capital 21,236,035 21,236,035 Accumulated deficit (21,814,992) (21,779,022) ------------------ ----------------- Total stockholders' deficit (358,911) (322,941) ------------------ ----------------- $ 60,840 $ 201,996 ================== =================
See accompanying notes to financial statements. 3 CHOICES ENTERTAINMENT CORPORATION STATEMENTS OF LOSS (Unaudited)
For the Three Months Ended March 31, --------------- 1998 1997 ------------------------- ------------------------- Operating costs and expenses: Selling and administrative expenses $ 36,178 $ 74,409 Professional and consulting expenses 30,661 57,992 Depreciation and amortization 81 7,457 ------------------------- ------------------------- 66,920 139,858 ------------------------- ------------------------- Other expenses: Gain on settlement of lawsuit 30,000 Interest income (expense), net 950 (17,061) ------------------------- ------------------------- 30,950 (17,061) ------------------------- ------------------------- Loss from continuing operations (35,970) (156,919) ------------------------- ------------------------- Discontinued operations - Note 4 Loss from discontinued operations (11,308) ------------------------- Net loss $ (35,970) $ (168,227) ========================= ========================= Net loss per share of common stock - Note 2: Basic loss per share: Continuing operations $ -0- $ (0.01) ========================= ========================= Discontinued operations $ -0- $ (0.01) ========================= ========================= Diluted loss per share: Continuing operations $ -0- $ (0.01) ========================= ========================= Discontinued operations $ -0- $ (0.01) ========================= =========================
See accompanying notes to financial statements. 4
CHOICES ENTERTAINMENT CORPORATION STATEMENT OF STOCKHOLDERS' DEFICIT For the Three Months Ended March 31, 1998 (Unaudited) Preferred Stock Common Stock Additional --------------- ------------ Paid-in Accumulated Shares Amount Shares Amount Capital Deficit Total ------------ ------ ------ ------ --------- ------- ----- Balance at December 31, 1997 109 $1 22,004,395 $220,044 $21,236,035 $(21,779,022) $(322,941) Net loss for the three months ended March 31, 1998 (35,970) (35,970) --------------------------------------------------------------------------------------------------- 109 $1 22,004,395 $220,044 $21,236,035 $(21,814,922) $(358,911) ===================================================================================================
See accompanying notes to financial statements. 5 CHOICES ENTERTAINMENT CORPORATION STATEMENTS OF CASH FLOWS (Unaudited)
For the Three Months Ended March 31, ---------- 1998 1997 ---- ---- Cash flows from operating activities: Net loss $ (35,970) $ (168,227) ---------------------------- -------------------------- Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 81 248,579 Cost of rental films sold 86,027 Loss on disposal of rental films 45,644 Videocassette and inventory reserves 4,844 Change in assets and liabilities: Increase in accounts receivable (28,877) (13,514) Decrease in merchandise inventories 31,794 Decrease in prepaid expenses 32,643 Decrease in other assets 1,762 Increase (decrease) in accounts payable (23,381) 89,860 Decrease in accrued merger and acquisition expenses (33,992) Decrease in accrued professional fees (78,528) (24,201) Decrease in deferred revenue (11,245) Increase (decrease) in accrued salaries (2,859) 12,627 Decrease in other accrued expenses (420) (25,166) ---------------------------- -------------------------- Total adjustments (133,985) 462,259 ---------------------------- -------------------------- Net cash provided by (used in) operating activities (169,955) 294,033 ---------------------------- -------------------------- Cash flows from investing activities: Purchase of equipment, net (5,997) Proceeds from sale of fixed asset 164 Purchase of videocassette rental films (345,706) ---------------------------- -------------------------- Net cash provided by (used in) investing activities 164 (351,703) ---------------------------- -------------------------- Cash flows from financing activities: Proceeds from notes payable 49,000 Repayment of notes payable (3,483) -------------------------- Net cash used in financing activities 45,517 -------------------------- Net increase (decrease) in cash (169,791) (12,153) Cash at beginning of period 197,117 66,739 ---------------------------- -------------------------- Cash at end of period $ 27,326 $ 54,586 ============================ ========================== Supplementary disclosure of cash flow information: Cash paid during the year for interest -0- $ 3,187 ============================ ==========================
See accompanying notes to financial statements. 6 CHOICES ENTERTAINMENT CORPORATION NOTES TO FINANCIAL STATEMENTS (Unaudited) Note 1 - Basis of Presentation And Significant Accounting Policies The financial information included herein for the three- month period ended March 31, 1998 and 1997 and as of March 31, 1998 are unaudited. In addition, the financial information does not include all disclosures required under generally accepted accounting principles because certain note information has been omitted; however, such information reflects all adjustments which are, in the opinion of management, necessary for a fair statement of the results of the interim periods and such adjustments are of a normal recurring nature. The results of operations for the three-month period ended March 31, 1998 are not necessarily indicative of the results to be expected for the full year. Reclassification of the 1997 financial statements has been made to conform with the presentation of the 1998 financial statements. Each share of Series C Preferred Stock is presently convertible into 40,000 shares of the Company's common stock. Note 2 - Net Loss Per Common Share Basic and diluted loss per share for the three-month periods ended March 31, 1998 and March 31, 1997, was computed by dividing the net loss by the weighted average number of common shares outstanding during the period. No consideration was given to the conversion of preferred stock since the result of that calculation would be anti-dilutive. Three Months Ended March 31, --------- 1998 1997 -------- -------- Number of shares used in calculation Basic 22,004,000 22,004,000 Diluted 22,004,000 22,004,000 Note 3 - Liquidity As previously reported, on June 16, 1997, the Company sold substantially all of its assets and business (the "West Coast Transaction") to West Coast Entertainment Corporation ("West Coast"). Notwithstanding the sale of its operating business, the Company's consolidated financial statements included herein have been presented on the basis that the Company is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred net losses in each year of its existence, with the exception of the year ended December 31, 1997, aggregating $21,814,992 from its inception through March 31, 1998, including a net loss of $35,970 for the three-month period ended March 31, 1998. As of March 31, 1998, the Company had a net working capital deficiency of approximately $362,000. Under the terms of the West Coast Transaction, the purchase price of $2,430,000 was paid to the Company in cash on June 16, 1997, less $243,000 that was held by West Coast in escrow, pursuant to the terms of a escrow agreement between the Company and West Coast, to satisfy certain indemnity obligations of the Company, if any, to West Coast, and which was, subject to amounts withheld pursuant to any claims made by West Coast, to be released to the Company over a period of eighteen months. On December 22, 1997, the Company negotiated a compromise and full release of the escrow upon the payment by West Coast to the Company of $211,000 on that date. The release of the escrow did not affect in any manner the Company's indemnity obligations to West Coast pursuant to the terms of the asset purchase agreement between the Company and West Coast. 7 CHOICES ENTERTAINMENT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) Note 3 - Liquidity (Continued) From the closing of the West Coast Transaction on June 16, 1997,to the present, the Company has principally (i) satisfied and compromised various claims and liabilities; (ii) defended and settled litigation, and paid professional fees, including substantial fees associated with such litigation; (iii) maintained administrative functions (at present the Company has no employees) and (iv) attempted to identify and consider new business opportunities. To date, the Company has been unsuccessful in concluding any new business opportunities or in securing needed capital, in part due to the uncertainties and costs associated with continuing stockholder litigation in California, which, as previously reported, was settled in the amount of $87,000, excluding professional fees, on November 20, 1997. The Company's efforts have also been hampered because of uncertainties associated with attempts, since November 25, 1997, by certain stockholders to gain control of the Company. As a consequence, the Company's financial condition has continued to deteriorate and the Company presently has very limited cash remaining with which to seek or conclude any new business opportunities. Moreover, certain liabilities remain and certain claims against the Company exist which, if successfully asserted, would result in there being no cash remaining. The existence of these claims and liabilities have further hampered the Company in its efforts to conclude new business opportunities or to secure needed capital. As of the date of this report, the Company has approximately $12,000 in cash remaining. As a result, the Company's viability is seriously in question. These claims and liabilities include but are not limited to professional fees billed in connection with the Company's discontinued acquisition program in the amount of $353,799, which remain unpaid to a law firm retained in that connection. Previously, in 1994, JD Store Equipment, Inc. ("JD Store Equipment") agreed that, in the event the then contemplated merger between JD Store Equipment and the Company (the "JD Merger") was not consummated, JD Store Equipment would pay to the Company legal fees billed to the Company by the above law firm. That law firm resigned as counsel to the Company shortly after JD Store Equipment notified the Company that it was terminating the JD Merger in September 1995. Subsequently, the Company made a demand for payment upon JD Store Equipment for all fees and disbursements in the amount of $793,281 billed to it by the law firm, of which $439,482 has to date been paid by the Company. JD Store Equipment has responded with a suggestion of a counter claim in an unspecified amount for losses allegedly incurred in connection with the acquisition program. To avoid the uncertainties associated with litigation and with collecting any judgment that may be obtained, the Company has attempted to reach a settlement with JD Store Equipment and the law firm, pursuant to which JD Store Equipment would pay unpaid fees to the law firm, the Company would release JD Store Equipment from any obligation to pay the $793,281 of legal fees billed to the Company and the Company would be released by JD Store Equipment and the law firm. Although discussions have taken place regarding such a settlement, there is no assurance that any settlement will be concluded. Moreover, the law firm has notified the Company that it intends to file a lawsuit against the Company in connection with its outstanding invoices. These claims and liabilities also include a request for indemnification by a former director, who is the President of JD Store Equipment, for legal fees expenses incurred in the defense of the previously concluded stockholder litigation in California, which are substantial and material in amount. The Company has denied the former director's request as it does not believe that it has any obligation for indemnification of such legal fees and expenses. However, it is contemplated that any settlement reached with JD Store Equipment, as described above, would include a release by the former director of any indemnification claims that he may have against the Company. There is no assurance, however, that any such settlement will be concluded or, if concluded, as to what would be the terms of such a settlement. The Company's 5% unsecured promissory notes (the "Notes"), in the principal amount of $680,000, matured on September 11, 1997, leaving the holders thereof with the sole remedy of converting such notes into shares of the Company's Series C Preferred Stock (valued at $.25 per share of Common Stock). The Holders of such Notes have, in accordance with the terms of the Notes, converted such Notes into 68 shares of the Company's Series C Preferred Stock. In addition, because of its severely distressed financial condition, the Company elected to 8 CHOICES ENTERTAINMENT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) Note 3 - Liquidity (Continued) issue 3.6833 shares of its Series C Preferred Stock to the holders of the Notes, in payment of $36,833 of accrued interest due such noteholders in September, 1997, in accordance with the terms of such Notes. In the event the Company is not successful in finding and concluding new business opportunities or in securing needed capital in the very near term, as to which no assurance can be given, the Company does not believe that there will any amounts available for distribution to the Company's stockholders. Note 4 - West Coast Transaction and Discontinued Operations As previously reported, the Company consummated the previously announced sale of substantially all of its assets to West Coast on June 16, 1997. Under the terms of the West Coast Transaction, the purchase price of $2,430,000 was paid to the Company in cash on June 16, 1997, less $243,000 that was held by West Coast in escrow, pursuant to the terms of a escrow agreement between the Company and West Coast, to satisfy certain indemnity obligations of the Company, if any, to West Coast, and which was, subject to amounts withheld pursuant to any claims made by West Coast, to be released to the Company over a period of eighteen months. On December 22, 1997, the Company negotiated a compromise and full release of the escrow upon payment by West Coast to the Company of $211,000 on that date. The release of the escrow did not affect in any manner the Company's indemnity obligations to West Coast pursuant to the terms of the asset purchase agreement between the Company and West Coast. Revenues for the discontinued business for the three-month period ended March 31, 1997, were $1,256,000. 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The following is Management's discussion and analysis of certain significant factors which have affected the Company's financial condition, changes in financial condition, and results of operations. The discussion also includes the Company's liquidity and capital resources at March 31, 1998 and later dated information, where practicable. FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES As previously reported, on June 16, 1997, the Company sold substantially all of its assets and business (the "West Coast Transaction") to West Coast Entertainment Corporation ("West Coast"). Notwithstanding the sale of its operating business, the Company's consolidated financial statements included herein have been presented on the basis that the Company is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred net losses in each year of its existence, with the exception of the year ended December 31, 1997, aggregating $21,814,992 from its inception through March 31, 1998, including a net loss of $35,970 for the three-month period ended March 31, 1998. As of March 31, 1998, the Company had a net working capital deficiency of approximately $362,000. Under the terms of the West Coast Transaction, the purchase price of $2,430,000 was paid to the Company in cash on June 16, 1997, less $243,000 that was held by West Coast in escrow, pursuant to the terms of a escrow agreement between the Company and West Coast, to satisfy certain indemnity obligations of the Company, if any, to West Coast, and which was, subject to amounts withheld pursuant to any claims made by West Coast, to be released to the Company over a period of eighteen months. On December 22, 1997, the Company negotiated a compromise and full release of the escrow upon the payment by West Coast to the Company of $211,000 on that date. The release of the escrow did not affect in any manner the Company's indemnity obligations to West Coast pursuant to the terms of the asset purchase agreement between the Company and West Coast. From the closing of the West Coast Transaction on June 16, 1997,to the present, the Company has principally (i) satisfied and compromised various claims and liabilities; (ii) defended and settled litigation, and paid professional fees, including substantial fees associated with such litigation; (iii) maintained administrative functions (at present the Company has no employees) and (iv) attempted to identify and consider new business opportunities. To date, the Company has been unsuccessful in concluding any new business opportunities or in securing needed capital, in part due to the uncertainties and costs associated with continuing stockholder litigation in California, which, as previously reported, was settled in the amount of $87,000, excluding professional fees, on November 20, 1997. The Company's efforts have also been hampered because of uncertainties associated with attempts, since November 25, 1997, by certain stockholders to gain control of the Company. As a consequence, the Company's financial condition has continued to deteriorate and the Company presently has very limited cash remaining with which to seek or conclude any new business opportunities. Moreover, certain liabilities remain and certain claims against the Company exist which, if successfully asserted, would result in there being no cash remaining. The existence of these claims and liabilities have further hampered the Company in its efforts to conclude new business opportunities or to secure needed capital. As of the date of this report, the Company has approximately $12,000 in cash remaining. As a result, the Company's viability is seriously in question. These claims and liabilities include but are not limited to professional fees billed in connection with the Company's discontinued acquisition program in the amount of $353,799, which remain unpaid to a law firm retained in that connection. Previously, in 1994, JD Store Equipment, Inc. ("JD Store Equipment") agreed that, in the event the then contemplated merger between JD Store Equipment and the Company (the "JD Merger") was not consummated, JD Store Equipment would pay to the Company legal fees billed to the Company by the above law firm. That law firm resigned as counsel to the Company shortly after JD Store Equipment notified the Company that it was terminating the JD Merger in September 1995. Subsequently, the Company made a demand for payment upon JD Store Equipment for all fees and disbursements in the amount of $793,281 billed to it by the law firm, of which $439,482 has to date been paid by the Company. JD Store Equipment has responded with a suggestion of a counter claim in an unspecified amount for losses allegedly incurred in connection with the acquisition program. To avoid the uncertainties associated with litigation and with collecting any judgment that 10 may be obtained, the Company has attempted to reach a settlement with JD Store Equipment and the law firm, pursuant to which JD Store Equipment would pay unpaid fees to the law firm, the Company would release JD Store Equipment from any obligation to pay the $793,281 of legal fees billed to the Company and the Company would be released by JD Store Equipment and the law firm. Although discussions have taken place regarding such a settlement, there is no assurance that any settlement will be concluded. Moreover, the law firm has notified the Company that it intends to file a lawsuit against the Company in connection with its outstanding invoices. These claims and liabilities also include a request for indemnification by a former director, who is the President of JD Store Equipment, for legal fees expenses incurred in the defense of the previously concluded stockholder litigation in California, which are substantial and material in amount. The Company has denied the former director's request as it does not believe that it has any obligation for indemnification of such legal fees and expenses. However, it is contemplated that any settlement reached with JD Store Equipment, as described above, would include a release by the former director of any indemnification claims that he may have against the Company. There is no assurance, however, that any such settlement will be concluded or, if concluded, as to what would be the terms of such a settlement. The Company's 5% unsecured promissory notes (the "Notes"), in the principal amount of $680,000, matured on September 11, 1997, leaving the holders thereof with the sole remedy of converting such notes into shares of the Company's Series C Preferred Stock (valued at $.25 per share of Common Stock). The Holders of such Notes have, in accordance with the terms of the Notes, converted such Notes into 68 shares of the Company's Series C Preferred Stock. In addition, because of its severely distressed financial condition, the Company elected to issue 3.6833 shares of its Series C Preferred Stock to the holders of the Notes, in payment of $36,833 of accrued interest due such noteholders in September, 1997, in accordance with the terms of such Notes. The Company's viability for the foreseeable future is and will continue to be dependent upon its ability to successfully conclude existing litigation, to find other business opportunities and to secure needed capital. No assurance can be given that the Company will be successful in that regard. In the event the Company is not successful, it is unlikely that there would be any amounts available for distribution to the Company's stockholders. This Quarterly Report on Form 10-QSB contains forward looking information with respect to, among other things, plans, future events or future performance of the Company, the occurrence of which involve certain risks and uncertainties that could cause actual results or future events to differ materially from those expressed in any forward looking statements. These risks and uncertainties include, but are not limited to, the risks and uncertainties associated with adverse litigation, the ability to identify and conclude alternative business opportunities, and those risks and uncertainties detailed in the Company's filings with the Securities and Exchange Commission. Where any forward looking statement includes a statement of the assumptions or bases believed to be reasonable and are made in good faith, assumed facts or bases almost always vary from actual results, and the differences between assumed facts or bases and actual results can be material, depending upon the circumstances. Where, in any forward looking statement, the Company expresses an expectation or belief as to plans or future results or events, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the statement of expectation or belief will result or be achieved or accomplished. The words "believe", "expect" and "anticipate" and similar expressions identify forward looking statements. CAPITAL EXPENDITURES . The Company had no capital expenditures during the three-month period ended March 31, 1998 and does not anticipate any capital expenditures for the remainder of the current year. MATERIAL CHANGES IN FINANCIAL CONDITION Assets: Total assets decreased by approximately $141,000 between December 31, 1997 and March 31, 1998, primarily as the result of both the decrease in cash used to pay certain obligations and liabilities of the Company, and to the increase in accounts receivable resulting from the favorable settlement of a previously reported lawsuit. 11 Liabilities: Total liabilities decreased by approximately $105,000 between December 31, 1997 and March 31, 1998, primarily due to the payment of a portion of the Company's liabilities from a portion of the remaining proceeds received from the West Coast Transaction. Stockholders' Deficit: Between December 31, 1997 and March 31, 1998, the increase in stockholders' deficit was due to the net loss of approximately $36,000 for the three-month period ended March 31, 1998. MATERIAL CHANGES IN RESULTS OF OPERATIONS Continuing Operations: Losses from continuing operations were approximately $36,000 and $157,000 during the three-month periods ended March 31, 1998 and 1997, respectively. The decrease of approximately $121,000 during the three- month period ended March 31, 1998, was primarily related to decreased selling and administrative and professional fee expenses . Discontinued Operations: The loss from discontinued operations was approximately $11,000 during the three-month period ended March 31, 1997. Net Loss: As a result of the foregoing, the Company incurred a net loss of approximately $36,000 during the three-month ended March 31, 1998. 12 PART II - OTHER INFORMATION Item 1. Legal Proceedings None Item 6. Exhibits and Reports on Form 8-K (a) Exhibits The exhibits listed in the Index to Exhibits appearing on Page E-1 are included as part of this report. (b) Reports on Form 8-K None. 13 SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CHOICES ENTERTAINMENT CORPORATION Date: May 22 , 1998 By: /s/ John Boylan ----------------- Chairman of the Board of Directors 14 INDEX TO EXHIBITS
Exhibit No. Description of Exhibit - -------- -------------------------- 3(a) Certificate of Incorporation, as amended (1) (b) Certificate of Designations of Series C Preferred Stock, as amended (2) (c) By-Laws, as amended (3) 4(a) Form of Certificate Evidencing Shares of Common Stock (4) (b) Form of 5% Promissory Note (5) 10(a) Consulting Agreement between Registrant and Ronald W. Martignoni (6) 27(a) Financial Data Schedule (7)
- ----------------------------------------------------------------------------- (1) Filed as an Exhibit to Registrant's Registration Statement on Form S-8 (File No. 33-87016) and incorporated herein by reference. (2) Filed as an Exhibit to Registrant's Annual Report on Form 10-KSB, for the year ended December 31,1996 and incorporated herein by reference. (3) Filed as an Exhibit to Registrant's Annual Report on Form 10-K for the year ended December 31, 1992 and incorporated herein by reference. (4) Filed as an Exhibit to Registrant's Registration Statement on Form S-1, inclusive of Post-Effective Amendment No.1 thereto (File No.: 33-198983) and incorporated herein by reference. (5) Filed as an Exhibit to Registrant's Quarterly Report on Form 10-QSB for the quarter ended September 30, 1995 and incorporated herein by reference. (6) Filed as an Exhibit to Registrant's Annual Report on Form 10-KSB for the year ended December 31, 1997 (7) Filed herewith. E-1 EX-27.A 2 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the financial statements of Choices Entertainment Corporation and is qualified in its entirety by reference to such financial statements. 3-MOS DEC-31-1998 MAR-31-1998 27,326 0 30,000 0 0 57,326 4,034 645 60,840 419,751 0 220,044 0 1 (578,955) 60,840 0 0 0 0 66,920 0 (950) 0 0 (35,970) 0 0 0 443,418 0 0
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