-----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, KxqmpRGJZEwr354N1GhYXgrT3gqfxDAB+sz9g4Us9Gx9x0eBRBz2C3jxuCd6fBNC 7X/boCmY2dMR2yV1uwG6uQ== 0001047469-99-038944.txt : 19991018 0001047469-99-038944.hdr.sgml : 19991018 ACCESSION NUMBER: 0001047469-99-038944 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991015 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: 99728885 BUSINESS ADDRESS: STREET 1: 2455 EAST SUNRISE BOULEVARD STREET 2: STE 313 CITY: FT LAUDERDALE STATE: FL ZIP: 33304 BUSINESS PHONE: 9547524289 MAIL ADDRESS: STREET 1: 2455 EAST SUNRISE BOULEVARD STREET 2: STE 313 CITY: FT LAUDERDALE STATE: FL ZIP: 33304 FORMER COMPANY: FORMER CONFORMED NAME: DATAVEND INC DATE OF NAME CHANGE: 19900401 10QSB 1 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 September 30, 1999 [ ] Transition report under Section 13 or 15 (d) of the Exchange Act For the transition period from _____________ to _____________ Commission file number 000-17001 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) 2455 East Sunrise Boulevard Suite 313 Ft. Lauderdale, Florida 33304 --------------------------------------------- ----------- (Address of Principal Executive Offices) (Zip code) Issuer's Telephone Number, Including Area Code 954-396-3144 ------------ - ------------------------------------------------------------------------------- (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 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 [ ] 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]
Index to Financial Statements Page Number - --------------------------------------------------------------------------------------------- Part I - FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Condensed Balance Sheet at September 30, 1999 And December 31, 1998 (Unaudited) .............................................. 1 Consolidated Condensed Statements of Loss for the Three and Nine Months Ended September 30, 1999 and 1998 (Unaudited) ............ 2 Consolidated Condensed Statement of Stockholders' Deficit for the Three Months Ended September 30, 1999 (Unaudited) ...................... 3 Consolidated Condensed Statements of Cash Flows for the Three and Nine Months Ended September 30, 1999 and 1998 (Unaudited) ............ 4 Notes to the Unaudited Consolidated Condensed Financial Statements ............. 5 Note 1. Basis of Presentation and Significant Accounting Policies .............. 5 Note 2. Net Income (Loss) Per Common Share ..................................... 5 Note 3. Liquidity .............................................................. 5 Note 4. West Coast Transaction and Discontinued Operations ..................... 6 Item 2. Management Discussion and Analysis ..................................... 6 Part II - OTHER INFORMATION Item 1. Legal Proceedings ...................................................... 7 Item 6. Exhibits and Reports on Form ........................................... 7
[THIS SPACE INTENTIONALLY LEFT BLANK] (i) Part I - FINANCIAL INFORMATION Item 1. Financial Statements CHOICES ENTERTAINMENT CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited)
September 30, 1999 December 31, 1998 ------------------ ----------------- ASSETS Current assets: Cash $ 54,991 $ 2,074 ------------ ------------ Total current assets 54,991 2,074 Other assets 146 146 ------------ ------------ Total assets $ 55,137 $ 2,220 ============ ============ LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities: Accounts payable $ 6,201 $ 11,851 Accrued merger and acquisition expenses -0- 50,000 Accrued professional fees 588,408 30,403 Notes payable - current 55,000 -0- ------------ ------------ Total current liabilities 649,609 92,254 ------------ ------------ Long-term liabilities Notes payable - noncurrent 125,000 -0- Other long-term liabilities 6,289 -0- ------------ ------------ Total long-term liabilities 131,289 -0- ------------ ------------ Total liabilities 780,898 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 (22,181,841) (21,546,114) ------------ ------------ Total stockholders' deficit (725,761) (90,034) ------------ ------------ $ 55,137 $ 2,220 ============ ============
See accompanying notes to financial statements. -1- CHOICES ENTERTAINMENT CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF LOSS (Unaudited)
For the Three Months For the Nine Months Ended September 30, Ended September 30, ---------------------- ---------------------- 1999 1998 1999 1998 ----- ---- ---- ---- Operating costs and expenses: Selling and administrative expenses $ 1,098 $ 11,266 $ 17,226 $ 70,597 Professional and consulting expenses 498,313 11,165 612,212 60,566 Depreciation and amortization -0- -0- -0- 484 ----------- ----------- ----------- --------- Total operating costs and expenses 499,411 22,431 629,438 131,647 ----------- ----------- ----------- --------- Other expenses: Loss (gain) on settlement of lawsuit -0- -0- -0- (40,000) Interest expense (income), net 3,125 -0- 6,289 (1,034) ----------- ----------- ----------- --------- Total other expenses (income) 3,125 -0- 6,289 (41,034) ----------- ----------- ----------- --------- Loss from continuing operations (502,536) (22,431) (635,727) (90,613) ----------- ----------- ----------- --------- Discontinued operations - Note x Loss from discontinued operations ----------- ----------- ----------- --------- Net loss $ (502,536) $ (22,431) (635,727) (90,613) =========== =========== =========== ========= Net loss per share of common stock - Note x: Basic loss per share: Continuing operations $ (0.02) $ -0- $ (0.03) $ -0- =========== =========== =========== ========= Discontinued operations $ -0- $ -0- $ -0- $ -0- =========== =========== =========== ========= Diluted loss per share: Continuing operations $ (0.02) $ -0- $ (0.02) $ -0- =========== =========== =========== ========= Discontinued operations $ -0- $ -0- $ -0- $ -0- =========== =========== =========== =========
See accompanying notes to financial statements. [THIS SPACE INTENTIONALLY LEFT BLANK] -2- CHOICES ENTERTAINMENT CORPORATION CONSOLIDATED CONDENSED STATEMENT OF STOCKHOLDERS' DEFICIT For the Three Months Ended September 30, 1999 (Unaudited)
Preferred Stock Common Stock -------------------- ------------------ Shares Amount Shares Amount -------- ---------- ---------- ---------- Balance at December 31, 1998: 109 $1 22,004,395 $220,044 Net loss for the nine months ended September 30, 1999: -------- ---------- ---------- ---------- 109 $1 22,004,395 $220,044 ======== ========== ========== ========== Additional Paid-in Accumulated Capital Deficit Total ----------- -------------- ------------- Balance at December 31, 1998: $21,236,035 $(21,546,114) $(90,034) Net loss for the nine months ended September 30, 1999: (635,727) (635,727) ----------- ------------- ---------- $21,236,035 $(22,181,841) $(725,761) =========== ============= ==========
See accompanying notes to financial statements. [THIS SPACE INTENTIONALLY LEFT BLANK] -3- CHOICES ENTERTAINMENT CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
For the Nine Months Ended September 30, -------------------------- 1999 1998 ---------- --------- Cash flows from operating activities: Net loss $(635,727) $(90,613) ---------- --------- Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization -0- 484 Change in assets and liabilities: Increase in accounts receivable -0- 1,124 Decrease in other assets Increase (decrease) in accounts payable (5,650) (21,642) Decrease in accrued merger and acquisition Expenses (50,000) Decrease in accrued professional fees 558,005 (70,944) Increase (decrease) in accrued salaries -0- (2,859) Decrease in other accrued expenses -0- ---------- --------- Total adjustments 502,355 (119,557) ---------- --------- Net cash provided by (used in) operating activities (133,372) (184,451) ---------- --------- Cash flows from financing activities: Proceeds from notes payable 180,000 Other long-term liabilities 6,289 ---------- --------- Net cash used in financing activities 186,289 ---------- --------- Net increase (decrease) in cash 52,917 (184,451) Cash at beginning of period 2,074 197,117 ---------- --------- Cash at end of period $ 54,991 $ 12,666 ========== ========= Supplementary disclosure of cash flow information: Cash paid during the year for interest $ -0- $ -0- ========== =========
See accompanying notes to financial statements. [THIS SPACE INTENTIONALLY LEFT BLANK] -4- CHOICES ENTERTAINMENT CORPORATION NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS Note 1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES The financial information included herein for the three-month and nine-month periods ended September 30, 1999 and 1998 and as of September 30, 1999 is 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 nine-month period ended September 30, 1999 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 nine-month periods ended September 30, 1999 and 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 nine-month periods ended September 30, 1999 and 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 results of the conversion of the Company's preferred stock.
For the Nine Months Ended September 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. 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. On or about August 30, 1999, the Company entered into a binding letter of intent with Republic Hotel Investors, Inc. ("RHII") of Seattle, Washington to acquire its business. RHII is in the business of acquiring, developing, owning, operating, managing and disposing of hotel -5- properties. RHII has been developing its business since at least 1995. RHII does not currently own or operate any hotel properties. The accounting impact of the acquisition transaction on the financial statements of the Company is considered by management to be immaterial. The letter of intent provides that the Company will acquire all of the rights, title and interest in and to RHII's assets consisting of books, documents, records, papers, human resources network (consisting of names, telephone numbers, contact and other information) business plan, goodwill, hotel acquisition and development agreements in various stages of negotiation, proprietary information, and other miscellaneous categories of business assets. The ultimate success of the Company in acquiring RHII and in successfully executing RHII's business strategy will depend on the Company's ability to and success in raising the amounts of money needed to pursue an acquisition strategy. No assurance can be given that the Company will be successful in raising the amounts of money required to be successful. The Company's viability for the foreseeable future is and will continue to be dependent upon its ability 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. 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. NOTES PAYABLE The Company has been dependent on borrowing for capital. The Company has borrowed $180,000 as of quarter ending September 30, 1999. $125,000 of the borrowings are in the form of two- (2) year notes and accrued interest at 10% per annum compounded annually payable at maturity in mid 2001. $55,000 of the borrowings are in the form of a 90 day note at 12% interest per annum compounded annually payable at maturity in late 1999. 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 September 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 September 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 with a nonaffiliated entity or acquiring assets from the same. 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 September 30, 1999 the Company incurred a net loss of $635,727 resulting in a net working capital deficiency of approximately $726,000 as of quarter-ending September 30, 1999. -6- The Company's viability for the foreseeable future is and will continue to be dependent upon its ability to find other business opportunity 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. 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. The Company has been dependent on borrowing for capital. The Company has borrowed $180,000 as of quarter ending September 30, 1999. Borrowings of $125,000 are in the form of two-year notes with accrued interest at 10% per annum compounded annually, payable at maturity in mid-2001. Borrowings of $55,000 are in the form of a 90-day note at 12% interest per annum compounded annually payable at maturity in late 1999. See Note 5 to Consolidated Financial Statements. On or about August 30, 1999, the Company entered into a binding letter of intent with Republic Hotel Investors, Inc. ("RHII") of Seattle, Washington to acquire its business. RHII is in the business of acquiring, developing, owning, operating, managing and disposing of hotel properties. RHII has been developing its business since at least 1995. RHII does not currently own or operate any hotel properties. The accounting impact of the acquisition transaction on the financial statements of the Company is considered by management to be immaterial. See Note 3 to Consolidated Financial Statements. Current officers and Directors of the Company estimated that outstanding liabilities of the Company are approximately $780,000 and cash in the bank is approximately $55,000. 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 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 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 computer systems will function correctly and will properly recognize dates after 1999. If they cannot adequately process beyond the year 1999 and are not corrected significant uncertainties exist. 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 -7- the Company after 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. Item 6. Exhibits 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 (a) Consulting Agreement between Registrant and Thomas Renna (7) (b) Letter of Intent to Acquire Republic Hotel Investors, Inc. (8) 27 Financial Data Schedule (9) - ------------------------------------------------------------------------------- (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 as an Exhibit to Registrant's Current Report on Form 8-K dated August 30, 1999 and incorporated herein by reference. (9) Filed herewith. 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: October 14, 1999 By: /s/ George D. Pursglove ----------------------------------- George D. Pursglove, Director and Interim Chief Financial Officer -8- EX-27 2 EX-27
5 9-MOS 3-MOS DEC-31-1999 DEC-31-1999 JAN-01-1999 JUL-01-1999 SEP-30-1999 SEP-30-1999 54,991 0 0 0 0 0 0 0 0 0 54,991 0 0 0 0 0 55,137 0 649,609 0 131,289 0 0 0 1 0 220,044 0 21,236,035 0 55,137 0 0 0 0 0 0 0 629,438 499,411 6,289 3,125 0 0 0 0 (635,727) (502,536) 0 0 (635,727) (502,536) 0 0 0 0 0 0 (635,727) (502,536) (0.03) (0.02) (0.02) (0.02)
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