-----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, PY6pT+IuJ0MBCJA5hPOZjNXOW0LqO2UaiV2CgKMHHyiUMKMVaAD5eg010WtDsSlE J2OLN0rBKcoxmAMWjVQ7Lg== 0001047469-99-028031.txt : 19990721 0001047469-99-028031.hdr.sgml : 19990721 ACCESSION NUMBER: 0001047469-99-028031 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990720 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: 99667148 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 FORM 10QSB 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 June 30, 1999 [ ] 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) 10770 Wiles Road Coral Springs, Florida 33076-2009 - ---------------------------------------- ---------- (Address of Principal Executive Offices) (Zip code) Issuer's Telephone Number, Including Area Code (954) 752-4289 ------------ -------------------------------------------------------------------------------- (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 June 15, 1999: 22,004,395 Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
PART I - FINANCIAL INFORMATION Item 1. Financial Statements
Index to Financial Statements Page Number - ----------------------------- ----------- Consolidated Condensed Balance Sheet at June 30, 1999 And December 31, 1998 (Unaudited)............................................... 1 Consolidated Condensed Statements of Loss for the Three and Six Months Ended June 30, 1999 and 1998 (Unaudited)................... 2 Consolidated Condensed Statements of Stockholders' Deficit for the Six Months Ended June 30, 1999 (Unaudited)...................................... 3 Consolidated Condensed Statements of Cash flows for the Three and Six Months Ended June 30, 1999 and 1998 (Unaudited)................... 4 Notes to the Unaudited Consolidated Condensed Financial Statements.............. 5 Item 2. Management Discussion and Analysis............................ 7 Part II - OTHER INFORMATION Item 1. Legal Proceedings............................................. 8 Item 6. Exhibits Index................................................ E-1
-i- Part I - FINANCIAL INFORMATION Item 1. Financial Statements CHOICES ENTERTAINMENT CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS
June 30, 1999 December 31,1998 ------------- ---------------- (Unaudited) (Unaudited) ASSETS Current assets: Cash $ 3,988 $ 2,074 ------------ ------------ Total current assets 3,988 2,074 Other assets 146 146 ------------ ------------ Total assets $ 4,134 $ 2,220 ============ ============ LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities: Accounts payable $ 5,851 $ 11,851 Accrued merger and acquisition expenses -0- 50,000 Accrued professional fees 93,345 30,403 ------------ ------------ Total current liabilities 99,196 92,254 ------------ ------------ Long-term liabilities Notes payable - noncurrent 125,000 -0- Other long-term liabilities 3,163 -0- ------------ ------------ Total long-term liabilities 128,163 -0- ------------ ------------ Total liabilities 227,359 92,254 Stockholders' deficit: Preferred stock, par value $.01 per share: Authorized 5,000 shares: 109 shares issued and outstanding in 1999 and 1998 1 1 Common stock, par value $.01 per share: Authorized 50,000,000 shares: issued and outstanding 22,004,395 shares in 1999 and 1998 220,044 220,044 Additional paid-in-capital 21,236,035 21,236,035 Accumulated deficit (21,679,305) (21,546,114) ------------ ------------ Total stockholders' deficit (223,225) (90,034) ------------ ------------ $ 4,134 $ 2,220 ============ ============
See accompanying notes to financial statements. -1- CHOICES ENTERTAINMENT CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF LOSS (Unaudited)
For the Three Months For the Six Months Ended June 30, Ended June 30, ------------------------- -------------------------- 1999 1998 1999 1998 --------- --------- ---------- ---------- Operating costs and expenses: Selling and administrative expenses $ 7,977 $ 23,153 $ 16,129 $ 59,331 Professional and consulting expenses 76,112 18,740 113,899 49,401 Depreciation and amortization -0- 403 -0- 484 --------- --------- --------- --------- Total operating costs and expenses 84,089 114,600 130,028 109,216 --------- --------- --------- --------- Other expenses: Gain on settlement of lawsuit -0- 10,000 -0- 40,000 Interest income (expense), net (2,958) 84 (3,163) 1,034 -------- --------- -------- --------- Total other expenses (2,958) 10,084 (3,163) 41,034 -------- --------- -------- --------- Loss from continuing operations $(87,047) (32,212) (133,191) (68,182) -------- --------- -------- --------- Discontinued operations: Loss from discontinued operations -------- --------- -------- --------- Net loss (87,047) $ (32,212) (133,191) (68,182) ======== ========= ======== ========= Net loss per share of common stock: Basic loss per share: Continuing operations $ -0- $ -0- $ (0.01) $ -0- ========= ========= ========= ========= Discontinued operations $ -0- $ -0- $ -0- $ -0- ========= ========= ========= ========= Diluted loss per share: Continuing operations $ -0- $ -0- $ (0.01) $ -0- ========= ========= ========= ========= Discontinued operations $ -0- $ -0- $ -0- $ -0- ========= ========= ========= =========
See accompanying notes to financial statements. -2- CHOICES ENTERTAINMENT CORPORATION CONSOLIDATED CONDENSED STATEMENT OF STOCKHOLDERS' DEFICIT For the Three Months Ended June 30, 1999 (Unaudited)
Preferred Stock Common Stock Additional -------------------- ----------------------- Paid-in Accumulated Shares Amount Shares Amount Capital Deficit Total -------- ---------- ---------- ---------- -------------- ------------ ----------- Balance at December 31, 1998: 109 $1 22,004,395 $220,044 $21,236,035 $(21,546,114) $ (90,034) Net loss for the six months ended June 30, 1999: (133,191) (133,191) --- --- ---------- -------- ----------- ------------ --------- 109 $1 22,004,395 $220,044 $21,236,035 $(21,679,305) $(223,225) === === ========== ======== =========== ============ =========
See accompanying notes to financial statements. [THIS SPACE INTENTIONALLY LEFT BLANK] -3- CHOICES ENTERTAINMENT CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
For the Six Months Ended June 30, ------------------------------- 1999 1998 ---------- --------- Cash flows from operating activities: Net loss $ (133,191) $ (35,970) ---------- --------- Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization -0- 81 Change in assets and liabilities: Increase in accounts receivable -0- (28,877) Decrease in other assets Increase (decrease) in accounts payable (6,000) (23,381) Decrease in accrued merger and acquisition Expenses (50,000) Decrease in accrued professional fees 62,942 (78,528) Increase (decrease) in accrued salaries -0- (2,859) Decrease in other accrued expenses -0- (420) ---------- ---------- Total adjustments 6,942 (133,985) ---------- ---------- Net cash provided by (used in) operating activities (126,249) (169,955) ---------- ---------- Cash flows from investing activities: Proceeds from sale of fixed asset 164 ----------- ---------- Net cash provided by (used in) investing activities 164 ----------- ---------- Cash flows from financing activities: Proceeds from notes payable 125,000 Other long-term liabilities 3,163 ----------- ---------- Net cash used in financing activities 128,163 ----------- ---------- Net increase (decrease) in cash 1,914 (169,791) Cash at beginning of period 2,074 197,117 ----------- ---------- Cash at end of period $ 3,988 $ 27,326 =========== ========== Supplementary disclosure of cash flow information: Cash paid during the year for interest $ -0- $ -0- =========== ==========
See accompanying notes to financial statements. -4- CHOICES ENTERTAINMENT CORPORATION NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS Note 1. Financial Statements Quarterly Financial Statements: The accompanying unaudited financial statements for the three-month and six-month periods ended March 31, and June 30, 1999 and 1998 have been prepared in accordance with the instructions for Form 10QSB and do not include all of the information and footnotes required by generally accepted accounting principles for completed financial statements. In the opinion of management, all adjustments, consisting of normal recurring adjustments, which are necessary for a fair presentation of the results for the interim period have been made. The results of operations for the three-month and six-month periods ended June 30, 1999, are not necessarily indicative of the results to be expected for the full year. Note 2. Summary of Significant Accounting Policies Net Income (Loss) Per Common Share Primary income per share for the three-month periods ended June 30, 1999 and 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 six-month period ended June 30, 1999, 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 results of the conversion of the Company's preferred stock.
For the Six Months Ended June 30, ---------------------------------- 1999 1998 ---------- ---------- Number of shares used in calculation Basic 22,004,000 22,004,000 Diluted 26,364,395 26,364,395
Cash and Cash Equivalents For cash flow purposes the Company considers all certificates of deposit and highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. -5- Revenue Recognition Revenue is recognized using the accrual method of accounting. 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. Note 5. Long Term Notes Payable The Company has been dependent on borrowing for operating capital. The Company has borrowed $125,000 as of quarter ending June 30, 1999. The notes are for a two- (2) year term and accrued interest at 10% per annum compounded annually payable at maturity. Note 6. Borrowing, Related Party Transactions The Company has entered into a consulting agreement (the "Consulting Agreement") with a director memorializing an agreement for the director to provide certain financial and analytical services to the Company in exchange for an accruing payment of $10,000 per month payable when, as and if the Company has cash not required for other important corporate purposes. The Consulting Agreement is effective as of June 1998 and expires by its terms December 1999. -6- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The following Management's discussion of certain significant factors that 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, 1999 and later dated information, where practicable. The following discussion should be read in conjunction with the Financial Statements and notes included in this Form 10-QSB. The Company generated no revenues during the three-months ended June 30, 1999 and 1998. Management of the Company anticipates that the Company will not generate any significant revenues until the Company accomplishes it business objective of merging or acquiring revenue producing assets from a nonaffiliated entity. The Company presently has no liquid financial resources to offer such a candidate and must rely upon an exchange of its stock to complete such a merger or acquisition. Between December 31, 1998 and June 30, 1999 the Company incurred a net loss of $133,191 resulting in a net working capital deficiency of approximately $95,000 at June 30, 1999. The Company currently is relying on borrowing to provide the minimum cash resources necessary primarily to maintain the Company's public company status. The Company's viability for the foreseeable future is and will continue to be dependent upon its ability to find other business opportunity, 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. 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 officers and Directors of the Company estimate that outstanding liabilities of the Company are approximately $227,000 and cash in the bank is approximately $2,000. 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 risk and uncertainties associated with adverse litigation, the ability to identify and conclude alternative business -7- 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 assumption or bases believed to be reasonable and are made in good faith, assumed facts or bases almost always vary from actual result, 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 and 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. The Company is aware of the issues associated with Year 2000 ("Y2K") software compliance and the need to upgrade existing programming code in any computer system that it may use or purchase as the year 2000 approaches. The year 2000 issue relates to whether a computer system will properly recognize dates after 1999. If it cannot adequately process beyond the year 1999 and is not corrected, significant difficulties may be encountered in using the computer system. The Company currently uses computer time on a system that is available on an as needed basis provided for by an affiliate of the Company. It is not anticipated that the Company will incur any negative impact as a result of this potential problem. However, it is possible that this issue may have an impact on the Company if the Company successfully consummates a merger or acquisition. Management intends to address this potential problem with any prospective merger or acquisition candidate. There can be no assurances that new management of the Company will be able to avoid a problem in this regard after a merger or acquisition is so consummated. PART II - OTHER INFORMATION Item 1. Legal Proceedings The Company is not aware of any pending legal proceedings to which the company is party or of which any of its property is the subject that has not been previously reported. -8- 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 (Registrant) Date: July 19, 1999 By: /s/ George D. Pursglove --------------------------------- George D. Pursglove, Director and Interim Chief Financial Officer -9- 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) 10.99 Consulting Agreement between Registrant and Thomas Renna (7) 27 Financial Data Schedule (8)
- ------------------------------------------------------------------------------ (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 as an Exhibit to Registrant's Quarterly Report on Form 10-QSB for the quarter ended March 31, 1999 and incorporated herein by reference. (8) Filed herewith. E-1 EX-27 2 EXHIBIT 27
5 6-MOS 3-MOS DEC-31-1999 DEC-31-1999 JAN-01-1999 APR-01-1999 JUN-30-1999 JUN-30-1999 3988 0 0 0 0 0 0 0 0 0 3988 0 0 0 0 0 4134 0 99196 0 128163 0 0 0 1 0 220044 0 21236035 0 4134 0 0 0 0 0 0 0 130028 84089 3163 2958 0 0 0 0 (133191) (87047) 0 0 (133191) (87047) 0 0 0 0 0 0 (133191) (87047) (.01) 0 (.01) 0
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