<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[xx] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
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or
[ ] 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: 33-99084-NY
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Rollo Entertainment Inc.
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(Exact name of registrant as specified in its charter)
Delaware 22-3372522
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5 Glenfield Road, Glenridge, New Jersey 07028
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(Address of principal executive offices) (Zip Code)
201-655-0388 or 201-744-6761
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
[X] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's class of
common stock, as of the latest practicable date.
The number of shares outstanding of each of the registrant's classes of common
stock, as of August 12, 1996 is 4,650,000 shares, all of one class of $.0001 par
value common stock.
1
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
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<S> <C>
PART I
Item 1. Financial Statements F1-F-5
Item 2. Management's Discussion and Analysis
or Plan of Operation 3-4
PART II
Item 1. Legal Proceedings 5
Item 2. Changes in Securities 5
Item 3. Defaults Upon Senior Securities 5
Item 4. Submission of Matters to a
Vote of Security Holders 5
Item 5. Other Information 5
Item 6. Exhibits and Reports on Form 8-K 5
Signatures 6
</TABLE>
2
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ROLLO ENTERTAINMENT INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
June 30, March 31,
1996 1996
---- ----
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash $ 106,205 $ 4,720
--------- ---------
PROPERTY AND EQUIPMENT:
Office equipment 2,147 1,947
Studio and sound equipment 58,000 --
Leasehold improvements 14,581 --
--------- ---------
Total 74,728 1,947
Less: Accumulated depreciation 344 247
--------- ---------
NET PROPERTY AND EQUIPMENT 74,384 1,700
--------- ---------
OTHER ASSETS:
Organization costs 1,316 1,316
Security deposits 2,650 --
Public offering expenses -- 15,058
--------- ---------
TOTAL OTHER ASSETS 3,966 16,374
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TOTAL ASSETS $ 184,555 $ 22,794
========= =========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
<S> <C> <C>
CURRENT LIABILITIES:
Note payable - stockholder $ 32,500 $ --
Accounts payable 6,975 4,400
Payroll taxes withheld and accrued 9,830 5,733
Accrued interest - stockholders 1,152 19
Accrued expenses 200 200
--------- ---------
TOTAL CURRENT LIABILITIES 50,657 10,352
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LONG-TERM DEBT:
Note payable - stockholder 70,000 70,000
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STOCKHOLDERS' EQUITY (DEFICIENCY):
Common stock, $.0001 par value,
authorized 10,000,000 shares;
issued and outstanding 4,650,000 shares 465 450
Additional paid-in capital 271,972 52,350
Deficit accumulated during the development stage (208,539) (110,358)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY (DEFICIENCY) 63,898 (57,558)
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 184,555 $ 22,794
========= =========
</TABLE>
See note to financial statements.
F1
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ROLLO ENTERTAINMENT INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Period from Period from
May 8, 1995 May 8, 1995
Three Months (Date of (Date of
Ended Inception) to Inception) to
June 30, June 30, June 30,
1996 1995 1996
---- ---- ----
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C>
REVENUES $ -- $ -- $ --
---------- ------ ----------
OPERATING EXPENSES:
Officer's salaries 31,250 -- 88,550
Salaries, other 10,769 -- 10,769
Other operating expenses 55,156 -- 108,195
---------- ------ ----------
TOTAL OPERATING EXPENSES 97,175 -- 207,514
---------- ------ ----------
LOSS FROM OPERATIONS BEFORE
OTHER INCOME (EXPENSE) AND
PROVISION FOR INCOME TAXES (97,175) -- (207,514)
---------- ------ ----------
OTHER INCOME (EXPENSE):
Interest expense - stockholders (1,133) -- (1,152)
Income income 127 -- 127
---------- ------ ----------
TOTAL OTHER INCOME (EXPENSE) (1,006) -- (1,025)
---------- ------ ----------
LOSS BEFORE PROVISION FOR
INCOME TAXES (98,181) -- (208,539)
PROVISION FOR INCOME TAXES -- -- --
---------- ------ ----------
NET LOSS $ (98,181) $ -- $ (208,539)
========== ====== ==========
LOSS PER COMMON SHARE (.02) -- (.05)
========== ====== ==========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 4,636,813 -- 4,534,488
========== ====== ==========
</TABLE>
See note to financial statements.
F2
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ROLLO ENTERTAINMENT INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
<TABLE>
<CAPTION>
Deficit
Common Stock Accumulated
------------ Additional During the
Number of Paid-in Development
Shares Amount Capital Stage Total
------ ------ ------- ----- -----
<S> <C> <C> <C> <C> <C>
Inception - May 8, 1995 -- $ -- $ -- $ -- $ --
July 1995, issuance of
common stock for cash 21 1 49,999 -- 50,000
September 1995, issuances
of common stock to an
officer for operating
expenses paid on behalf
of the Company 8 1 1,483 -- 1,484
September 1995, issuances
of common stock for
operating expenses 16 1 1,315 -- 1,316
Stock split 4,499,955 447 (447) -- --
Net loss for the period -- -- -- (110,358) (110,358)
--------- ---- -------- --------- ---------
BALANCE - March 31, 1996 4,500,000 450 52,350 (110,358) (57,558)
April 1996, issuance of
common stock for cash 150,000 15 219,607 -- 219,622
April 1996, issuance of
common stock purchase
warrants -- -- 15 -- 15
Net loss for the period -- -- -- (98,181) (98,181)
--------- ---- -------- --------- ---------
BALANCE - June 30, 1996
(unaudited) 4,650,000 $465 $271,972 $(208,539) $ 63,898
========= ==== ======== ========= =========
</TABLE>
See note to financial statements.
F3
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ROLLO ENTERTAINMENT INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Period from Period from
May 8, 1995 May 8, 1995
Three Months (Date of (Date of
Ended Inception) to Inception) to
June 30, June 30, June 30,
1996 1995 1996
---- ---- ----
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(98,181) $ -- $(208,539)
Adjustments to reconcile net loss to
net cash used by operating activities:
Depreciation 97 -- 344
Issuance of common stock for
operating expenses -- -- 2,800
Increase in operating liabilities:
Accounts payable 2,575 -- 6,975
Payroll taxes withheld and accrued 4,097 -- 9,830
Accrued expenses 1,133 -- 1,352
-------- ------ ---------
NET CASH USED BY OPERATING ACTIVITIES (90,279) -- (187,238)
-------- ------ ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment (72,781) -- (74,728)
Organization costs paid -- -- (1,316)
Security deposits (2,650) -- (2,650)
-------- ------ ---------
NET CASH USED BY INVESTING ACTIVITIES (75,431) -- (78,694)
-------- ------ ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 300,000 -- 350,000
Proceeds from issuance of warrants 15 -- 15
Proceeds from stockholders' notes 32,500 -- 102,500
Public offering expenses (65,320) -- (80,378)
-------- ------ ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 267,195 -- 372,137
-------- ------ ---------
NET INCREASE IN CASH 101,485 -- 106,205
CASH - beginning 4,720 -- --
-------- ------ ---------
CASH - ending $106,205 $ -- $ 106,205
======== ====== =========
NON-CASH OPERATING ACTIVITIES:
Common stock issued for operating
expenses $ -- $ -- $ 2,800
======== ====== =========
</TABLE>
See note to financial statements.
F4
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ROLLO ENTERTAINMENT INC.
(A DEVELOPMENT STAGE COMPANY)
NOTE TO FINANCIAL STATEMENTS
JUNE 30, 1996
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included.
Operating results for the three month period ended June 30, 1996 are
not necessarily indicative of the results that may be expected for the
year ending March 31, 1997. The unaudited financial statements should
be read in conjunction with the financial statements and footnotes
thereto included in the Company's Form 10-KSB for the period from May
8, 1995 (date of inception) to March 31, 1996.
F5
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION
The Company, organized under the laws of the State of Delaware on May
8, 1995, is a development stage company formed so as to operate as an
independent artist and repertoire ("A&R") firm dedicated to locating, signing,
promoting, recording (i.e. making of demo and master tapes only) and developing
(primarily) new musical entertainment artists and thereafter marketing such
persons primarily by way of contracting of the artist to a recording label.
Due in part to the facts that (a) the Company (as heretofore
indicated) was only relatively recently organized, (b) initial funding necessary
so as to commence activities was received in July 1995 (pursuant to which an
aggregate of 4,500,000 shares were issued for cash consideration of $52,800),
(c) no revenues from operations have been received through June 30, 1996 and (d)
the Company only recently, on April 9, 1996, received net proceeds from the sale
of shares of its common stock (in accordance with Form SB-2 Registration
Statement declared effective February 12, 1996 pursuant to which 150,000 shares
were issued at $2.00 per share) - the Company's plan of operation is primarily
and principally as heretofore indicated in its February 12, 1996 Prospectus,
which Prospectus details Company plans for its next 12 months of operations
including the manner in which it intends to satisfy its cash requirements over
such period of time. Such information contains details regarding Company plans
for establishing and equipping recording facilities (as subsequently
accomplished in May-June 1996) and the manner in which management of the Company
intends to continue to operate as an independent A&R firm; the Company having
recently signed 14 recording artists to management contracts.
Most recently (i.e. on June 25, 1996) the Company filed its first Form
10-KSB for its fiscal year ended March 31, 1996 which was the first report filed
by the Company pursuant to its reporting requirements under the Securities
Exchange Act of 1934. Such Form 10-KSB contains detailed subsequent additional
information regarding Company activities and reference is herewith made thereto
(as if incorporated herein by reference) with respect to such detailed
information as is contained primarily (but not limited to) in Items 1 and 2
thereof.
The Company's plan of operation for the next twelve months (in addition
to as indicated above) indicates (a) management's belief that the Company can
satisfy its cash requirements and operate, in the manner indicated in its
Prospectus, without raising significant additional funds during the next twelve
months assuming initial receipt of sufficient revenues which may be generated
and which may result from expenditures of significant sums of money to date for
operational purposes - of which there can be no assurance. In the event that
such revenues are not received in as timely a manner as anticipated, if at all,
then in that event management contemplates, if and when necessary, the raising
of additional funds either through debt or equity financing if and when the need
arises and primarily for those purposes outlined in its Prospectus , (b) that
the only expected purchase or sale of plant and/or significant equipment relates
to the Company's having already established its recording studio in Montclair,
New Jersey and the expenditures incurred as a result thereof, primarily with
respect to purchase of necessary studio/recording equipment therefore and (c)
management's intentions to hire certain additional
3
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employees if, as and when needed and the fact that the Company recently hired
and continues to employ two additional persons engaged in A&R activities (each
of whose summarized resumes appear in the Company's aforesaid Form 10-KSB for
its fiscal year ended March 31, 1996).
Based upon information contained directly above and the fact that the
Company did not become operational prior to its receipt of monies from its
initial sale of securities (i.e. $52,800 in July, 1996), there is no comparative
information relating to the quarter ended June 30, 1995.
The Company, as of June 30, 1996 had total assets of $184,555
consisting primarily of cash of $106,205 and studio and sound equipment of
$58,000 and leasehold improvements of $14,581. As of June 30, 1996 total
liabilities amounted to $120,657 (of which $70,000 is represented by a long term
note payable to a majority stockholder) with the balance of $50,657 being
current liabilities (inclusive of a $32,500 note hereinafter referred to). From
its inception (May 8, 1995) through June 30, 1996 the Company has incurred
losses totaling $208,539 of which $98,181 were incurred during the three month
period ended June 30, 1996.
The June 30, 1996 financial statements take into account the Company's
receipt (in April 1996) of net proceeds of $235,750 from its public offering of
securities and further takes into account or consideration the subsequent loan
to the Company by its counsel and a principal stockholder of $32,500 in May
1996.
The Company's assets are kept in a highly liquid form with a
significant portion of its cash assets being placed in interest bearing
account(s). By placing the Company's funds in relatively liquid assets, the
Company balances its need to have quick access to its assets in the form of cash
(for carrying out its business purposes any time that an appropriate opportunity
and/or need arises) with the desire to earn interest income at competitive rates
to help defray ongoing administrative costs.
As of June 30, 1996 the Company did not have any current material
commitments for capital expenditures. Its capital was considered adequate for
current intended or anticipated administrative expenses.
4
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PART II
Item 1. Legal Proceedings - None
Item 2. Changes in Securities - None
Item 3. Defaults Upon Senior Securities - None
Item 4. Submission of Matters to a
Vote of Security Holders - None
Item 5. Other Information - None
Item 6. (a) Exhibits - None
(b) Reports on Form 8-K None
5
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SIGNATURES
Pursuant to 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.
ROLLO ENTERTAINMENT INC.
By /s/ John Rollo
---------------------
John Rollo, President
Dated: August 13, 1996
6
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BALANCE
SHEET STATEMENT OF OPERATIONS AND STATEMENT OF STOCKHOLDERS DEFICIENCY.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 106,205
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 106,205
<PP&E> 74,728
<DEPRECIATION> 344
<TOTAL-ASSETS> 184,555
<CURRENT-LIABILITIES> 50,657
<BONDS> 70,000
0
0
<COMMON> 465
<OTHER-SE> 63,433
<TOTAL-LIABILITY-AND-EQUITY> 184,555
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 97,175
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,006
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (98,181)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (98,181)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
</TABLE>
