-----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, G5QxM/WQuwLt+O+AX1UqPs24i+PTak1bkz+mR9Ivd0NOdR3KnyerBUmR+DVEEEV7 nc1egaGTrQEcxsbjkROaIg== 0001047469-98-032424.txt : 19980824 0001047469-98-032424.hdr.sgml : 19980824 ACCESSION NUMBER: 0001047469-98-032424 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980821 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: 98695755 BUSINESS ADDRESS: STREET 1: 10770 WILES ROAD CITY: CORAL SPRINGS STATE: FL ZIP: 33076 BUSINESS PHONE: 9547524289 MAIL ADDRESS: STREET 1: 10770 WILES ROAD CITY: CORAL SPRINGS STATE: FL ZIP: 33076 FORMER COMPANY: FORMER CONFORMED NAME: DATAVEND INC DATE OF NAME CHANGE: 19900401 10QSB 1 10-QSB 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 quarterly period ended June 30, 1998 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________________to_______________ Commission file number: 000-17001 CHOICES ENTERTAINMENT CORPORATION (Name of small business issuer in its charter) Delaware 52-1529536 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 10770 Wiles Road Coral Springs, Florida 33076-2009 (Address of principal executive offices) (Zip Code) (954) 752-4289 (Registrant's telephone number, including area code) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15 (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 [ ] As of May 15, 1998, 22,004,395 shares of Common Stock were outstanding. Transitional Small Business Disclosure Format (check one): Yes [ ] No [ X ] PART I: FINANCIAL INFORMATION Item 1. Financial Statements CHOICES ENTERTAINMENT CORPORATION BALANCE SHEETS (Unaudited)
June 30, December 31, 1998 1997 ------------ ------------ ASSETS: Current Assets: Cash $ $197,117 Accounts receivable 1,123 -------- Total Current Assets $ 198,240 Equipment, net 3,631 Other assets $ 125 -------- -------- TOTAL ASSETS $ $201,996 -------- -------- -------- -------- LIABILITIES AND STOCKHOLDERS' DEFICIT Current Liabilities: Accounts payable $ $ 33,104 Accrued merger and acquisition expense 353,799 Accrued professional fees 129,758 Accrued salaries 2,859 Other accrued expenses 5,419 -------- Total Current Liabilities 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: 22,004,395 shares issued and 220,044 220,044 outstanding in 1998 and 1997 Additional paid-in-capital 21,236,035 Accumulated deficit (21,779,022) -------- ------------ Total Stockholders' Deficit (322,941) -------- -------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ $201,996 -------- -------- -------- --------
2 CHOICES ENTERTAINMENT CORPORATION STATEMENTS OF LOSS (Unaudited)
For the Three Months For the Six Months Ended June 30, Ended June 30, 1998 1997 1998 1997 ---- ---- ---- ---- Operating costs and expenses: Selling and administrative expenses $ $ 43,598 $ $ 72,117 Professional and consulting expenses 61,210 126,441 Depreciation and amortization 9,792 19,584 -------- ------ 114,600 218,142 Other expenses: Interest expense, net 17,429 34,490 Loss from continuing operations (132,029) (252,632) Discontinued operations--Note 4 Loss from discontinued operations (256,161) (303,785) Gain on sale of discontinued operations, 1,312,045 1,312,045 net of tax of $13,092 Gain (loss) from discontinued operations 1,055,884 1,008,260 Net income (loss) $ 923,855 $ $ 755,628 Net income (loss) per share of common stock--Note 2: Primary income (loss) per share Continuing operations $ $(0.01) $ $(0.01) Discontinued operations $ $0.05 $ $0.05 Fully diluted income (loss) per share: Continuing operations $ $(0.01) $ $(0.01) Discontinued operations. $ $0.04 $ $0.04
3 CHOICES ENTERTAINMENT CORPORATION STATEMENTS OF STOCKHOLDERS' DEFICIT FOR THE SIX MONTHS ENDED JUNE 30, 1998 (Unaudited)
Preferred Stock Common Stock Additional paid- in Acuumulated Deficit Shares Shares Amount Capiatal Balance at December 31, 1997 109.0 22,004,395 220,044 21,236,035 21,779,022
Net income for the 6 months ended June 30, 1998 CHOICES ENTERTAINMENT CORPORATION STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended June 30, ------------------- 1998 1997 ---- ---- Cash Flows From Operating Activities: Net income (loss) $ $ 755,628 Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 480,015 Gain on sale of assets, net of tax (Note 4) (1,312,045) Cost of rental films sold 121,342 Loss on disposal of rental films 82,125 Videocassette and inventory reserves 7,667 Change in assets and liabilities: Increase in cash held in escrow (243,000) (Increase) decrease in accounts receivable 4,126 (Increase) decrease in merchandise inventories 62,584 (Increase) decrease in prepaid expenses 16,183 Increase in other deferred expenses 1,762 Increase (decrease) in accounts payable (588,807) Decrease in accrued merger and acquisition expenses (50,550) Increase (decrease) in accrued professional fees (104,114) Decrease in deferred revenue (27,797) Decrease in accrued salaries (37,635) Decrease in accrual for lease cancellation (1,250) and litigation reserves Increase (decrease) in other accrued expenses (158,648 -------- -------- Total adjustments (1,748,042) Net cash provided (used in) operating activities (992,414) -------- --------
4
Cash Flows From Investing Activities: Purchase of equipment, net Purchase of videocassette rental films Net proceeds from sale of assets (Note 4) Net cash provided (used in) investing activities -------- -------- Net increase (decrease) in cash Cash at end of period $ $ -------- -------- -------- -------- Supplemental Disclosure of cash flow information: Cash paid during the year for interest $ $
Note 1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES The financial information included herein for the three-month and six-month periods ended June 30, 1998 and 1997 and as of June 30,1998, and December 31, 1997, 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 six-month period ended June 30, 1998, are not necessarily indicative of the results to be expected for the full year. Note 2. NET INCOME (LOSS) PER COMMON SHARE Primary income per share for the three-month and six-month periods ended June 30, 1998 was computed by dividing the net income by the weighted average number of common shares outstanding during the periods. Fully diluted income per share for the three-month and six-month periods ended June 30, 1998, was computed by dividing the net income by the weighted average number of common shares outstanding during the periods, as well as the number of common shares that would be outstanding as a result of the conversion of the Company's preferred stock.
Three Months Ended June 30, Six Months Ended June 30, 1997 1998 1997 1998 Number of shares used in calculation: Primary dilution Full dilution
5 Note 3. LIQUIDITY As previously reported, on June 16, 1997, the Company sold substantially all of its assets and business to West Coast Entertainment Corporation, ("West Coast"). Notwithstanding the sale of its operating business, the Company's 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's viability for the foreseeable future is and will continue to be dependent upon its ability to find other business opportunities, to secure needed capital and to successfully conclude existing litigation. 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. 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. The consideration for the assets sold consisted entirely of cash in the amount of $2,430,000. A substantial portion of the proceeds was used to reduce a portion of the Company's liabilities at closing. In addition, $243,000 of the proceeds was escrowed with West Coast pursuant to the terms of the Asset Purchase Agreement between the Company and West Coast. The escrowed funds have been released to the Company and expended. 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 June 30, 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 to West Coast Entertainment Corporation, ("West Coast"). Notwithstanding the sale of its operating business, the Company's 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 no operations at the present, however, and has engaged in no business since at least June 16, 1998. Current Directors of the Company estimate that outstanding liabilities of the Company are approximately $504,901 and cash in the bank is approximately $9,000. 6 The Company's viability for the foreseeable future is and will continue to be dependent upon its ability to find other business opportunities, to secure needed capital and to successfully conclude existing litigation. 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. PART II - OTHER INFORMATION Item 1. Legal Proceedings The Company is not aware of any pending legal proceedings to which the Company is a party or of which any of its property is the subject that has not been previously reported. Item 6. Exhibits (a) Exhibits. There are no exhibits other than Exhibit 27 (Financial Data Schedule) included as part of this report. (b) Reports on Form 8-K. The Company filed a Form 8-K dated June 16, 1998 which included disclosure under Item 1. Change of Control of Registrant thereof. 7 SIGNATURES In accordance with the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Choices Entertainment Corporation (Registrant) Date: August 20, 1998 By: /s/________________________ George D. Pursglove , Interim Chief Financial Officer 8 EX-27 2 EXHIBIT 27
5 6-MOS DEC-31-1998 APR-01-1998 JUN-30-1998 0 0 0 0 0 0 0 0 0 0 0 0 0 220,044 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
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