SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
______ EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
------------------
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: 0-27494
LEISUREPLANET HOLDINGS, LTD.
----------------------------
(Exact name of Registrant as Specified in Its Charter)
Bermuda Not Applicable
------------------------------- ---------------------------------
(State or Other Jurisdiction of (IRS Employer Identification No.)
Incorporation or Organization)
Clarendon House, Church Street, Hamilton HM CX, Bermuda
-------------------------------------------------------
(Address of Principal Executive Offices with Zip Code)
Registrant's Telephone Number, Including Area Code: 809-295-1422
------------
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. Yes X_ No ___
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes ____No __
APPLICABLE ONLY TO CORPORATE ISSUERS:
The number of shares of common stock outstanding as of November 13, 2000 was
8,388,932.
<PAGE>
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1999
<TABLE>
<CAPTION>
Page
----
PART I - FINANCIAL INFORMATION
<S> <C> <C> <C> <C> <C> <C>
Item 1. Unaudited Consolidated Balance Sheets at September 30, 2000 and June 30, 2000.....................3
Unaudited Consolidated Pro Forma Balance Sheet reflecting the disposal of
First Lifestyle Holdings at September 30, 2000 and June 30, 2000..................................5
Unaudited Consolidated Statements of Operations for the three months ended
September 30, 2000 and 1999.......................................................................7
Unaudited Consolidated Statements of Cash Flows for the three months ended
September 30, 2000 and 1999.......................................................................8
Notes to the Unaudited Consolidated Financial Statements.........................................9
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations............................................................................14
Item 3. Quantitative and Qualitative Disclosures About Market Risk.......................................16
PART II - OTHER INFORMATION
Item 5. Other Information................................................................................17
Item 6. Exhibits and Report on 10-K......................................................................17
Signatures..................................................................................................18
</TABLE>
<PAGE>
LEISUREPLANET HOLDINGS LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
ASSETS
--------------------------------------------------------------------------------- ---------------- -----------------
SEPTEMBER JUNE
30, 30,
2000 2000
$ $
--------------------------------------------------------------------------------- ---------------- -----------------
CURRENT ASSETS
--------------------------------------------------------------------------------- ---------------- -----------------
<S> <C> <C>
Cash and cash equivalents 21,811,405 29,853,067
--------------------------------------------------------------------------------- ---------------- -----------------
Accounts receivable, net 14,016,546 10,608,197
--------------------------------------------------------------------------------- ---------------- -----------------
Inventories 8,733,186 9,386,857
--------------------------------------------------------------------------------- ---------------- -----------------
Prepaid expenses and other current assets 2,499,479 3,631,348
--------------------------------------------------------------------------------- ---------------- -----------------
Deferred income taxes ________- 898,280
- -----------
--------------------------------------------------------------------------------- ---------------- -----------------
TOTAL CURRENT ASSETS 47,060,616 54,377,749
--------------------------------------------------------------------------------- ---------------- -----------------
Property, plant and equipment, net 17,979,719 18,215,196
--------------------------------------------------------------------------------- ---------------- -----------------
Investments in Affiliates 921,040 1,283,935
--------------------------------------------------------------------------------- ---------------- -----------------
Intangible assets, net 19,088,480 20,685,179
--------------------------------------------------------------------------------- ---------------- -----------------
Deferred charges 186,247 228,078
--------------------------------------------------------------------------------- ---------------- -----------------
Other assets ___34,151 31,362
------ -------------
--------------------------------------------------------------------------------- ---------------- -----------------
TOTAL ASSETS 85,270,253 94,821,499
========== ==========
--------------------------------------------------------------------------------- ---------------- -----------------
</TABLE>
-3-
SEE ACCOMPANYING NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
LEISUREPLANET HOLDINGS LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
--------------------------------------------------------------------------------- ---------------- -----------------
SEPTEMBER JUNE
30, 30,
2000 2000
$ $
--------------------------------------------------------------------------------- ---------------- -----------------
CURRENT LIABILITIES
<S> <C> <C>
--------------------------------------------------------------------------------- ---------------- -----------------
Bank overdraft 1,602,588 896,860
--------------------------------------------------------------------------------- ---------------- -----------------
Current portion of long term debt 1,993,373 2,105,153
--------------------------------------------------------------------------------- ---------------- -----------------
Accounts payable 9,218,060 13,046,686
--------------------------------------------------------------------------------- ---------------- -----------------
Other provisions and accruals 3,974,239 5,754,638
--------------------------------------------------------------------------------- ---------------- -----------------
Dividends payable 286,806 179,840
--------------------------------------------------------------------------------- ---------------- -----------------
Income taxes payable 955,144 676,003
--------------------------------------------------------------------------------- ---------------- -----------------
Other taxes payable _134,236 303,812
------- -----------
--------------------------------------------------------------------------------- ---------------- -----------------
TOTAL CURRENT LIABILITIES 18,164,446 22,962,992
--------------------------------------------------------------------------------- ---------------- -----------------
Long term debt 15,256,735 15,473,769
--------------------------------------------------------------------------------- ---------------- -----------------
Deferred income taxes 3,462,191 4,402,038
----------- -----------
--------------------------------------------------------------------------------- ---------------- -----------------
TOTAL LIABILITIES 36,883,372 42,838,799
---------- ----------
--------------------------------------------------------------------------------- ---------------- -----------------
Minority interest 37,617,834 37,059,840
--------------------------------------------------------------------------------- ---------------- -----------------
FSAH mandatory redeemable preferred stock 8,236,102 8,771,930
--------------------------------------------------------------------------------- ---------------- -----------------
Commitments and contingencies (Note 9)
--------------------------------------------------------------------------------- ---------------- -----------------
STOCKHOLDERS' EQUITY
--------------------------------------------------------------------------------- ---------------- -----------------
Capital stock:
A class common stock, $0.01 par value - authorized 23,000,000 Shares,
issued and outstanding 8,368,676 shares
(1999: 5,383,142 shares) 83,687 83,687
--------------------------------------------------------------------------------- ---------------- -----------------
B class common stock, $0.01 par value - authorized 2,000,000 shares,
Issued and outstanding 946,589 shares (1999: 946,589 shares) 9,466 9,466
--------------------------------------------------------------------------------- ---------------- -----------------
FSAH B class common stock, R0,001 par value - authorized 10,000,000
shares, issued and outstanding 2,671,087 shares
(1999: 2,550,466 shares) 600 600
--------------------------------------------------------------------------------- ---------------- -----------------
Preferred stock, $0.01 par value - authorized 5,000,000 shares, none
Issued - -
--------------------------------------------------------------------------------- ---------------- -----------------
Additional paid-in capital 64,307,442 64,307,442
--------------------------------------------------------------------------------- ---------------- -----------------
Accumulated deficit (38,861,029) (37,772,100)
--------------------------------------------------------------------------------- ---------------- -----------------
Accumulated Other Comprehensive Income (23,007,221) (20,478,165)
------------ ------------
--------------------------------------------------------------------------------- ---------------- -----------------
TOTAL STOCKHOLDERS' EQUITY _2,532,945 6,150,930
--------- -----------
--------------------------------------------------------------------------------- ---------------- -----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 85,270,253 94,821,499
========== ==========
--------------------------------------------------------------------------------- ---------------- -----------------
</TABLE>
-4-
<PAGE>
PROFORMA INFORMATION
The Proforma balance sheet has been prepared on the basis that the disposal of
Lifestyle was effective September 30, 2000. The proceeds of the sale are
$34,830,176
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
ASSETS
--------------------------------------------------------------------------------------------------------------------
SEPTEMBER JUNE
30, 30,
2000 2000
$ $
--------------------------------------------------------------------------------- ---------------- -----------------
<S> <C> <C>
CURRENT ASSETS
--------------------------------------------------------------------------------- ---------------- -----------------
Cash and cash equivalents 4,629,556 29,853,067
--------------------------------------------------------------------------------- ---------------- -----------------
Accounts receivable, net - 10,608,197
--------------------------------------------------------------------------------- ---------------- -----------------
Inventories - 9,386,857
--------------------------------------------------------------------------------- ---------------- -----------------
Prepaid expenses and other current assets 1,848,430 3,631,348
--------------------------------------------------------------------------------- ---------------- -----------------
Deferred income taxes ________- 898,280
- -----------
--------------------------------------------------------------------------------- ---------------- -----------------
TOTAL CURRENT ASSETS 42,477,986 54,377,749
--------------------------------------------------------------------------------- ---------------- -----------------
Property, plant and equipment, net 17,694 18,215,196
--------------------------------------------------------------------------------- ---------------- -----------------
Investments in Affiliates 916,733 1,283,935
--------------------------------------------------------------------------------- ---------------- -----------------
Intangible assets, net 1,101,389 20,685,179
--------------------------------------------------------------------------------- ---------------- -----------------
Deferred charges 186,247 228,078
--------------------------------------------------------------------------------- ---------------- -----------------
Other assets _______- 31,362
- -------------
--------------------------------------------------------------------------------- ---------------- -----------------
TOTAL ASSETS 44,700,049 94,821,499
========== ==========
--------------------------------------------------------------------------------- ---------------- -----------------
</TABLE>
-5-
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
PROFORMA INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
--------------------------------------------------------------------------------------------------------------------
SEPTEMBER JUNE
30, 30,
2000 2000
$ $
--------------------------------------------------------------------------------- ---------------- -----------------
CURRENT LIABILITIES
--------------------------------------------------------------------------------- ---------------- -----------------
<S> <C> <C>
Bank overdraft 182,171 896,860
--------------------------------------------------------------------------------- ---------------- -----------------
Current portion of long term debt 954,447 2,105,153
--------------------------------------------------------------------------------- ---------------- -----------------
Accounts payable 83,086 13,046,686
--------------------------------------------------------------------------------- ---------------- -----------------
Other provisions and accruals 437,999 5,754,638
--------------------------------------------------------------------------------- ---------------- -----------------
Dividends payable 286,724 179,840
--------------------------------------------------------------------------------- ---------------- -----------------
Income taxes payable - 676,003
--------------------------------------------------------------------------------- ---------------- -----------------
Other taxes payable ________- 303,812
- -----------
--------------------------------------------------------------------------------- ---------------- -----------------
TOTAL CURRENT LIABILITIES 1,944,427 22,962,992
--------------------------------------------------------------------------------- ---------------- -----------------
Long term debt 14,156,250 15,473,769
--------------------------------------------------------------------------------- ---------------- -----------------
Deferred income taxes ________- 4,402,038
- -----------
--------------------------------------------------------------------------------- ---------------- -----------------
TOTAL LIABILITIES 16,100,677 42,838,799
---------- ----------
--------------------------------------------------------------------------------- ---------------- -----------------
Minority interest - 37,059,840
--------------------------------------------------------------------------------- ---------------- -----------------
FSAH mandatory redeemable preferred stock 8,236,102 8,771,930
--------------------------------------------------------------------------------- ---------------- -----------------
Commitments and contingencies (Note 9)
--------------------------------------------------------------------------------- ---------------- -----------------
STOCKHOLDERS' EQUITY
--------------------------------------------------------------------------------- ---------------- -----------------
Capital stock:
A class common stock, $0.01 par value - authorized 23,000,000 Shares,
issued and outstanding 8,368,676 shares
(1999: 5,383,142 shares) 83,687 83,687
--------------------------------------------------------------------------------- ---------------- -----------------
B class common stock, $0.01 par value - authorized 2,000,000 shares,
Issued and outstanding 946,589 shares (1999: 946,589 shares) 9,466 9,466
--------------------------------------------------------------------------------- ---------------- -----------------
FSAH B class common stock, R0,001 par value - authorized 10,000,000
shares, issued and outstanding 2,671,087 shares
(1999: 2,550,466 shares) 600 600
--------------------------------------------------------------------------------- ---------------- -----------------
Preferred stock, $0.01 par value - authorized 5,000,000 shares, none
Issued - -
--------------------------------------------------------------------------------- ---------------- -----------------
Additional paid-in capital 64,307,442 64,307,442
--------------------------------------------------------------------------------- ---------------- -----------------
Accumulated deficit (31,890,633) (37,772,100)
--------------------------------------------------------------------------------- ---------------- -----------------
Accumulated Other Comprehensive Income (12,147,292) (20,478,165)
------------ ------------
--------------------------------------------------------------------------------- ---------------- -----------------
TOTAL STOCKHOLDERS' EQUITY 20,363,270 6,150,930
---------- -----------
--------------------------------------------------------------------------------- ---------------- -----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 44,700,049 94,821,499
========== ==========
--------------------------------------------------------------------------------- ---------------- -----------------
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-6-
<PAGE>
LEISUREPLANET HOLDINGS LIMITED
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------- ---------------- -----------------
THREE THREE
MONTHS MONTHS
ENDED ENDED
SEPTEMBER SEPTEMBER
30, 30,
2000 1999
RESTATED
$ $
--------------------------------------------------------------------------------- ---------------- -----------------
<S> <C> <C>
Revenues ____- -
- ---------------
--------------------------------------------------------------------------------- ---------------- -----------------
Operating expenses
--------------------------------------------------------------------------------- ---------------- -----------------
Cost of sales - -
--------------------------------------------------------------------------------- ---------------- -----------------
Selling, general and administrative costs 468,505 233,685
--------------------------------------------------------------------------------- ---------------- -----------------
Amortisation of intangibles 150,200 58,912
--------------------------------------------------------------------------------- ---------------- -----------------
Depreciation 1,890 1,756
--------------------------------------------------------------------------------- ---------------- -----------------
Foreign currency loss _465,516 -
------- -------------
--------------------------------------------------------------------------------- ---------------- -----------------
1,086,111 294,353
--------- --------
--------------------------------------------------------------------------------- ---------------- -----------------
Operating loss (1,086,111) (294,353)
--------------------------------------------------------------------------------- ---------------- -----------------
Equity in losses of affiliates (247,739) -
--------------------------------------------------------------------------------- ---------------- -----------------
Preference dividend (121,579) -
--------------------------------------------------------------------------------- ---------------- -----------------
Interest expense (168,312) (477,612)
--------- ---------
--------------------------------------------------------------------------------- ---------------- -----------------
Loss from continuing operations before income taxes (1,623,741) (771,965)
--------------------------------------------------------------------------------- ---------------- -----------------
Provision for income taxes _______- (353)
- ------------
--------------------------------------------------------------------------------- ---------------- -----------------
Loss from continuing operations (1,623,741) (772,318)
--------------------------------------------------------------------------------- ---------------- -----------------
Discontinued operations (Note 7)
--------------------------------------------------------------------------------- ---------------- -----------------
(Loss)/income from operations, net of income taxes of $512,366 and
$661,060 __534,812 (2,155,502)
------- -----------
--------------------------------------------------------------------------------- ---------------- -----------------
Net loss (1,088,929) (2,927,820)
----------- -----------
--------------------------------------------------------------------------------- ---------------- -----------------
--------------------------------------------------------------------------------- ---------------- -----------------
Earnings/(Loss) per share - basic and diluted
--------------------------------------------------------------------------------- ---------------- -----------------
Continuing operations ($0,18) ($0,12)
--------------------------------------------------------------------------------- ---------------- -----------------
Discontinued operations $0,06 ($0,34)
------ -------
--------------------------------------------------------------------------------- ---------------- -----------------
Net income/(loss) ($0,12) ($0,46)
------- -------
--------------------------------------------------------------------------------- ---------------- -----------------
--------------------------------------------------------------------------------- ---------------- -----------------
Weighted average common stock outstanding:
--------------------------------------------------------------------------------- ---------------- -----------------
Basic and diluted 9,315,265 6,377,981
--------- ---------
--------------------------------------------------------------------------------- ---------------- -----------------
</TABLE>
-7-
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
LEISUREPLANET HOLDINGS LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDUTED)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------- ---------------- -----------------
THREE THREE
MONTHS MONTHS
ENDED ENDED
SEPTEMBER SEPTEMBER
30, 30,
2000 1999
RESTATED
$ $
--------------------------------------------------------------------------------- ---------------- -----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
-----------------
--------------------------------------------------------------------------------- ---------------- -----------------
Net loss from continuing operations (1,623,741) (772,318)
-----------------
--------------------------------------------------------------------------------- ---------------- -----------------
ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH USED IN OPERATING ACTIVITIES:
-----------------
--------------------------------------------------------------------------------- ---------------- -----------------
Dividend charge 121,579 -
-----------------
--------------------------------------------------------------------------------- ---------------- -----------------
Depreciation and amortisation 152,090 60,668
-----------------
--------------------------------------------------------------------------------- ---------------- -----------------
Deferred income taxes 177,761 291,726
-----------------
--------------------------------------------------------------------------------- ---------------- -----------------
Net loss/(gain) on sale of assets 12,484 31,244
-----------------
--------------------------------------------------------------------------------- ---------------- -----------------
Net loss/(gain) on minority shares issued in Lifestyle - 424
-----------------
--------------------------------------------------------------------------------- ---------------- -----------------
Changes in operating assets and liabilities, net of (7,745,624) (2,749,632)
discontinued operations
-----------------
--------------------------------------------------------------------------------- ---------------- -----------------
Creation of debenture redemption reserve fund 131,250 281,250
-----------------
--------------------------------------------------------------------------------- ---------------- -----------------
Equity in losses of affiliates ___247,739 -
------- ----------------
-----------------
--------------------------------------------------------------------------------- ---------------- -----------------
Net cash used in continuing operations (8,526,462) (2,377,433)
--------------------------------------------------------------------------------- ---------------- -----------------
Net cash provided by discontinued operations _1,952,651 213,539
--------- ----------
--------------------------------------------------------------------------------- ---------------- -----------------
Net cash used in operating activities (6,573,811) (2,643,099)
----------- -----------
--------------------------------------------------------------------------------- ---------------- -----------------
--------------------------------------------------------------------------------- ---------------- -----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
-----------------
--------------------------------------------------------------------------------- ---------------- -----------------
Acquisition of intangibles (5,004) (5,954)
-----------------
--------------------------------------------------------------------------------- ---------------- -----------------
Acquisition of property, plant and equipment (1,520,226) (880,525)
-----------------
--------------------------------------------------------------------------------- ---------------- -----------------
Proceeds on disposal of property, plant and equipment 68,808 9,134
-----------------
--------------------------------------------------------------------------------- ---------------- -----------------
Proceeds on other assets sold 807 -
-----------------
--------------------------------------------------------------------------------- ---------------- -----------------
Repayment of loan by affiliates ___95,000 -
------ --------------
-----------------
--------------------------------------------------------------------------------- ---------------- -----------------
Net cash provided by/(used in) investing activities (1,360,615) (877,345)
----------- ----------
--------------------------------------------------------------------------------- ---------------- -----------------
--------------------------------------------------------------------------------- ---------------- -----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
--------------------------------------------------------------------------------- ---------------- -----------------
Short term borrowings, net 801,227 (1,114,067)
--------------------------------------------------------------------------------- ---------------- -----------------
Proceeds from long term debt - 1,063,365
--------------------------------------------------------------------------------- ---------------- -----------------
Repayment of long term debt (267,775) -
--------------------------------------------------------------------------------- ---------------- -----------------
Proceeds on minority shares issued in Lifestyle - 16,221
-----------------
--------------------------------------------------------------------------------- ---------------- -----------------
Proceeds on issuance of common stock ________- 160,000
- -----------
--------------------------------------------------------------------------------- ---------------- -----------------
Net cash provided by financing activities __533,452 125,519
------- -----------
--------------------------------------------------------------------------------- ---------------- -----------------
Effect of exchange rate changes on cash (640,688) 117,324
---------- -----------
--------------------------------------------------------------------------------- ---------------- -----------------
Net decrease in cash and cash equivalents (8,041,662) (3,277,601)
--------------------------------------------------------------------------------- ---------------- -----------------
Cash and cash equivalents at beginning of period 29,853,067 20,813,301
---------- ----------
--------------------------------------------------------------------------------- ---------------- -----------------
Cash and cash equivalents at end of period 21,811,405 17,535,700
============ ==========
--------------------------------------------------------------------------------- ---------------- -----------------
</TABLE>
-8-
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
1. FINANCIAL INFORMATION
Leisureplanet Holdings Limited (formerly First South Africa Corp., Ltd.)
(the "Company"), was founded on September 6, 1995. The purpose of the
Company has changed from acquiring and operating South African Companies
to one of investing in Internet and technology related industries.
The principal activities of the group include the following:
INTERNET RELATED ACTIVITIES
The original investment made in Leisureplanet.com ("LPI"), the Internet
travel related services company, has been unsuccessful due to a lack of
further investor funding into the loss making entity, and is currently
under voluntary administration in the United Kingdom.
Further investments have been made in Internet technology related
companies, which is in line with the Company's new focus.
2. BASIS OF PREPARATION
The unaudited interim condensed consolidated financial statements include
the accounts of the Company and all of its subsidiaries in which it has a
majority voting interest. Investments in affiliates are accounted for
under the equity method of accounting. All inter-company accounts and
significant transactions have been eliminated in the consolidated
financial statements.
Certain information and factual disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to the
rules and regulations of the Securities and Exchange Commission. These
financial statements should be read in conjunction with the consolidated
financial statements and related notes contained in the Company's 2000
form 10-K.
In the opinion of management, the interim condensed consolidated
financial statements reflect all adjustments necessary for a fair
presentation of the interim periods. All such adjustments are of a normal
recurring nature. The results of operations for the interim period are
not necessarily indicative of the results of operations to be expected
for the full year.
NET INCOME/(LOSS) PER SHARE
Basic net income/(loss) per share is computed by dividing net
income/(loss) by the weighted average number of common shares
outstanding. Diluted net income/(loss) per share is computed by dividing
net income/(loss) by the weighted average number of common shares
outstanding and dilutive potential common shares which includes the
dilutive effect of stock options, warrants and convertible debentures.
Dilutive potential common shares for all periods presented are computed
utilising the treasury stock method.
COMPREHENSIVE INCOME
Total comprehensive loss was $3,532,985 and $2,409,279 for the three
months ended September 30, 2000 and 1999, respectively.
-9-
<PAGE>
2. BASIS OF PREPARATION (CONTINUED)
RECENTLY ISSUED ACCOUNTING STANDARDS
In June 1998, the FASB adopted SFAS No. 133, as amended by SFAS No. 137
and SFAS No. 138, "Accounting for Derivative Instruments and Hedging
Activities." SFAS No. 133 establishes accounting and reporting standards
requiring that every derivative instrument (including certain derivative
instruments embedded in other contracts) be recorded in the balance sheet
as either an asset or liability measured at its fair value and that
changes in the derivative's fair value be recognised currently in
earnings unless specific hedge accounting criteria are met. Special
accounting for qualifying hedges allows derivatives gains and losses to
offset related results on the hedged item in the income statement and
requires that the company must formally document, designate and assess
the effectiveness of transactions that receive hedge accounting. SFAS No.
133 is effective for fiscal years beginning after June 15, 2000. The
Company believes that the future adoption of this statement will not have
a significant impact on the results of operations or financial position
of the Company.
Staff Accounting Bulletin, "SAB" No. 101 "Revenue Recognition in
Financial Statements" provides the staff's views in applying Generally
Accepted Accounting Principles to selected revenue recognition issues.
SAB 101 is effective no later than the fourth quarter of fiscal years
beginning after December 15, 1999. The Company believes that the adoption
of the provision of this SAB will not have any significant impact on the
continuing results of operations and financial position of the Company.
3. INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
---------------------------------------------------------------------- ---------------- ----------------
SEPTEMBER JUNE
30, 30,
2000 2000
$ $
---------------------------------------------------------------------- ---------------- ----------------
<S> <C> <C>
Finished goods 4,789,180 5,147,642
---------------------------------------------------------------------- ---------------- ----------------
Work in progress 296,858 358,890
---------------------------------------------------------------------- ---------------- ----------------
Raw materials and ingredients 2,406,989 2,701,284
---------------------------------------------------------------------- ---------------- ----------------
Supplies 1,240,159 1,179,041
---------------------------------------------------------------------- ---------------- ----------------
8,733,186 9,386,857
---------------------------------------------------------------------- ---------------- ----------------
</TABLE>
-10-
<PAGE>
4. INVESTMENTS IN AFFILIATES
A summary of the impact of these investments on the consolidated
financial statements is presented below:
<TABLE>
<CAPTION>
----------------------------------------------------- ---------------- ---------------- ----------------
EFFECTIVE SEPTEMBER JUNE
PERCENTAGE 30, 30,
OWNERSHIP 2000 2000
$ $
----------------------------------------------------- ---------------- ---------------- ----------------
Investments in and receivables from unconsolidated
affiliates
----------------------------------------------------- ---------------- ---------------- ----------------
<S> <C> <C> <C>
HotelSupplyGroup. Com 51% 86,376 183,134
----------------------------------------------------- ---------------- ---------------- ----------------
Magnolia Broadband 48% 830,357 1,076,338
----------------------------------------------------- ---------------- ---------------- ----------------
Hall Lifestyle Products 50% __4,307 24,463
----------------------------------------------------- ---------------- ---------------- ----------------
921,040 1,283,935
----------------------------------------------------- ---------------- ---------------- ----------------
----------------------------------------------------- ---------------- ---------------- ----------------
Equity share of losses of unconsolidated affiliates:
----------------------------------------------------- ---------------- ---------------- ----------------
HotelSupplyGroup. Com 51% (1,758) (37,223)
----------------------------------------------------- ---------------- ---------------- ----------------
Magnolia Broadband 48% (245,981) (123,662)
----------------------------------------------------- ---------------- ---------------- ----------------
(247,739) (160,885)
----------------------------------------------------- ---------------- ---------------- ----------------
</TABLE>
Goodwill arising on the Company's investment in Magnolia of $1,300,000 is
amortised over a three-year period.
5. DISCONTINUED OPERATIONS
FIRST LIFESTYLE HOLDINGS LIMITED ("LIFESTYLE")
The following summarizes the operating results of the Lifestyle
discontinued operation:
<TABLE>
<CAPTION>
---------------------------------------------------------------------- ---------------- ----------------
THREE THREE
MONTHS MONTHS
ENDED ENDED
SEPTEMBER SEPTEMBER
30, 30,
2000 1999
RESTATED
$ $
---------------------------------------------------------------------- ---------------- ----------------
<S> <C> <C>
Revenue 21,346,406 22,656,341
---------- ----------
---------------------------------------------------------------------- ---------------- ----------------
Operating income 1,406,958 1,588,457
--------- ---------
---------------------------------------------------------------------- ---------------- ----------------
Net income, net of minority interest of
$557,993,and $577,851 534,812 610,925
------- ----------
---------------------------------------------------------------------- ---------------- ----------------
</TABLE>
-11-
<PAGE>
5. DISCONTINUED OPERATIONS (CONTINUED)
At September 30, 2000 assets of First Lifestyle Holdings Limited included
in the balance sheet were as follows:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------- ----------------
$
--------------------------------------------------------------------------------------- ----------------
Assets
--------------------------------------------------------------------------------------- ----------------
<S> <C> <C>
Current assets (including cash of $16,012,026) 39,412,806
--------------------------------------------------------------------------------------- ----------------
Property, plant and equipment 17,962,026
--------------------------------------------------------------------------------------- ----------------
Intangibles, net 17,987,873
--------------------------------------------------------------------------------------- ----------------
Other assets 38,458
-------------
--------------------------------------------------------------------------------------- ----------------
TOTAL ASSETS 75,401,163
----------
--------------------------------------------------------------------------------------- ----------------
Current liabilities 16,135,019
--------------------------------------------------------------------------------------- ----------------
Long term debt 1,100,485
--------------------------------------------------------------------------------------- ----------------
Deferred taxes 3,462,191
--------------------------------------------------------------------------------------- ----------------
Minority shareholders interest 26,757,907
----------
--------------------------------------------------------------------------------------- ----------------
TOTAL LIABILITIES 47,455,602
----------
--------------------------------------------------------------------------------------- ----------------
</TABLE>
LEISUREPLANET.COM ("LPI")
Due to the lack of investor appetite for loss making Internet businesses,
no further funding was available to fund the activities of LPI,
previously Leisureplanet Limited, the Internet travel related business.
On August 2, 2000 LPI was placed under voluntary administration in the
United Kingdom. Subsequent to this date, on August 31, 2000 the
administrator placed LPI into liquidation. The liabilities of LPI exceed
the assets and, where appropriate, provision has been made for any
liabilities, contingent or otherwise, which the Company may incur.
The following summarizes the operating results of the LPI segment:
<TABLE>
<CAPTION>
---------------------------------------------------------------------- ---------------- ----------------
THREE THREE
MONTHS MONTHS
ENDED ENDED
SEPTEMBER SEPTEMBER
30, 30,
2000 1999
---------------------------------------------------------------------- ---------------- ----------------
Revenue ____- 65,597
<S> <C> <C> <C> <C> <C> <C>
- ------
---------------------------------------------------------------------- ---------------- ----------------
Operating loss ____- (2,771,899)
- -----------
---------------------------------------------------------------------- ---------------- ----------------
Net loss, net of minority interest of $nil and $nil - (2,766,427)
---------- -----------
---------------------------------------------------------------------- ---------------- ----------------
</TABLE>
-12-
<PAGE>
6. CASH FLOWS
The changes in assets and liabilities consist of the following:
<TABLE>
<CAPTION>
---------------------------------------------------------------------- ---------------- ----------------
THREE THREE
MONTHS MONTHS
ENDED ENDED
SEPTEMBER SEPTEMBER
30, 30,
2000 1999
RESTATED
$ $
---------------------------------------------------------------------- ---------------- ----------------
<S> <C> <C>
Decrease in accounts receivable (4,181,079) (3,091,469)
---------------------------------------------------------------------- ---------------- ----------------
(Increase)/decrease in inventories 82,749 (370,612)
---------------------------------------------------------------------- ---------------- ----------------
Increase in prepaid expenses and other current assets 940,431 (134,002)
---------------------------------------------------------------------- ---------------- ----------------
Increase/(decrease) in accounts payable (3,279,543) 916,266
---------------------------------------------------------------------- ---------------- ----------------
Decrease in other provisions and accruals (1,638,469) (562,391)
---------------------------------------------------------------------- ---------------- ----------------
Increase in other taxes payable 330,287 139,456
---------------------------------------------------------------------- ---------------- ----------------
Increase in income taxes payable _________- 353,120
- ------------
---------------------------------------------------------------------- ---------------- ----------------
(7,745,624) (2,749,632)
=========== -----------
---------------------------------------------------------------------- ---------------- ----------------
---------------------------------------------------------------------- ---------------- ----------------
NET CASH PROVIDED BY DISCONTINUED OPERATIONS CONSISTS OF THE
FOLLOWING:
---------------------------------------------------------------------- ---------------- ----------------
---------------------------------------------------------------------- ---------------- ----------------
Net income/(loss) of discontinued operations: 534,812 (2,155,502)
---------------------------------------------------------------------- ---------------- ----------------
---------------------------------------------------------------------- ---------------- ----------------
Depreciation and amortisation 846,267 1,311,985
---------------------------------------------------------------------- ---------------- ----------------
---------------------------------------------------------------------- ---------------- ----------------
Minority share of (losses)/gains 557,993 577,851
---------------------------------------------------------------------- ---------------- ----------------
---------------------------------------------------------------------- ---------------- ----------------
Equity in losses of affiliates 13,579 -
---------------------------------------------------------------------- ---------------- ----------------
---------------------------------------------------------------------- ---------------- ----------------
Shares to be issued 479,205
--------------- -----------
-
---------------------------------------------------------------------- ---------------- ----------------
---------------------------------------------------------------------- ---------------- ----------------
1,952,651 213,539
=========== ===========
---------------------------------------------------------------------- ---------------- ----------------
</TABLE>
7. COMMITMENTS AND CONTINGENCIES
South African Secondary Tax on Companies at 12,5 percent is payable on
all dividends declared out of distributable reserves of South African
companies.
The company has guaranteed the banking facilities of certain of its
subsidiaries previously disposed of during prior years. These guarantees
amount to $1,580,000
The Future minimum non-cancellable operating lease payments are not
material.
8. SUBSEQUENT EVENTS
On October 12, 2000, the sale of Lifestyle became irrevocable after
approval of the South African regulatory authorities was obtained.
On November 17, 2000 LPHL acquired all of the assets and the business of
the Fantasy Sports division of goracing Interactive Services Inc., for a
purchase consideration of $3,5 Million
-13-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
BACKGROUND AND HISTORY
Leisureplanet Holdings Limited ("LPHL"), formerly First South Africa Corp., Ltd
was incorporated in September 1995. The Company's intention is to actively
pursue acquisitions fitting a pre defined investment strategy:
o Acquiring controlling stakes in small, high quality, high growth,
Technology and Internet related businesses with strong management teams.
o Our investments must show an ability to contribute, in the short to medium
term, to earnings per share through operating profit or capital
appreciation.
o We aim to add value to our investments by operating in partnership with
committed, incentivised, entrepreneurial management who show the vision and
ability to grow their businesses into industry or niche leaders.
The Company has disposed of First Lifestyle Holdings Limited ("Lifestyle"), its
remaining South African operating subsidiary. On June 21, 2000 the Company
received an offer from Lifestyle management to buy Lifestyle from the Company.
The Company accepted the offer on September 26, 2000 at a general meeting of
Lifestyle shareholders. Regulatory approval was obtained from the South African
monopolies commission on October 12, 2000. Proceeds from the sale were received
on November 6, 2000.
Due to the lack of investor appetite for loss making Internet businesses, no
further funding was available to fund the activities of Leisureplanet.com
("LPI"), the Internet travel related business. On August 2, 2000 LPI was placed
under voluntary administration in the United Kingdom. Full provision has been
made for the Company's investment in LPI in the accounts for the year ended June
30, 2000..
RESULTS OF OPERATIONS
The results of operations analyse the corporate activity of the group, as
Lifestyle and LPI are no longer included as continuing operations. Discussion of
the results of these operations is given under the heading, discontinued
operations, below.
QUARTER ENDED SEPTEMBER 30, 2000 AS COMPARED TO QUARTER ENDED SEPTEMBER 30, 1999
Selling, general and administrative expenses
Selling, general and administrative expenses for the quarter ended
September 30, 2000 increased by $0,15 Million to $0,38 Million as
compared to $0,23 Million for the quarter ended September 30, 1999. This
increase is primarily due to the level of corporate activity undertaken
by the Company head office to support its new equity investments and to
actively seek out new investments utilising the pre-defined criteria
identified above.
Amortisation of intangibles
.
Amortisation of intangibles increased from $0,06 Million for the three
months ended September 30, 1999 to $0,15 Million in the three months
ended September 30, 2000. This increase is primarily due to goodwill that
arose on the investment in Magnolia Broadband, which contributed $0,1
Million to the current year charge.
Depreciation
Depreciation charge relates to minor office equipment; furniture and
computer equipment. Due to the nature of the head office function, these
charges are immaterial.
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QUARTER ENDED SEPTEMBER 30, 2000 AS COMPARED TO QUARTER ENDED SEPTEMBER 30, 1999
(CONTINUED)
Foreign currency loss
Foreign currency loss of $0,47 Million represents the loss realized on
the translation of the amount owing to LPHL from FSAH.
Provision for income taxes
The Company is registered in Bermuda, where no tax laws are applicable.
Equity in losses of affiliates
The Company acquired a 48% stake in Magnolia Broadband and a 51% stake in
HotelSupplyGroup.com. These companies are start-up ventures, which have
only incurred expenses to date. The charge of $0,25 Million represents
the Company's equity accounted share of their operating losses for the
period.
Preference dividend declared
During the current quarter the preference dividend on the mandatory
redeemable preference shares has been accrued on a time proportion basis
as the agreement to pay preference dividends provides for two options,
the first being that the dividend payable must be based on the ordinary
dividend declared by Lifestyle, or the second option must increase by a
minimum of 25% percent over the prior year. The first option is payable
three days after receipt of the Lifestyle dividend, the second option is
payable on February 19, of each calendar year. Since no Lifestyle
preference dividend was declared during the prior fiscal year and the
mandatory redeemable preference shares are to be redeemed during November
2000 a further dividend of $0,12 Million has been provided for during the
current quarter.
Interest expense
Interest expense has decreased by $0,30 Million from an interest expense
of $0,48 Million to $0,17 Million. The conversion of debentures during
the previous fiscal year has resulted in a saving of $0,28 Million in
interest over the same period in the prior year.
Discontinued operations
During the current quarter a gain of $0,54 Million arose on discontinued
operations as compared to a loss of $2,16 Million in the prior year
September quarter. The prior year quarter included a loss of 2,77 Million
relating to LPI. LPI went into administration during the current quarter
and no further operating losses were recorded as the remaining assets and
liabilities were fully provided for at June 30, 2000. The net income
generated by Lifestyle decreased by $0,06 Million over the prior quarter
due to deterioration in the South African exchange rate and a smaller
percentage shareholding in Lifestyle as compared to the prior year.
Net (loss)/income
As a result of the above the Company has achieved a loss of $1,00 Million
in the current quarter as compared to a loss of $2,93 Million in the
quarter ended September 30, 1999.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Cash decreased by $8,04 Million from $29,85 Million to $21.81 Million.
The decrease is due to the utilisation of cash by the discontinued
Lifestyle operation to fund the working capital cycle and asset
acquisitions.
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Working capital decreased by $2,43 Million from $31,41 Million to $28.98
Million primarily due to an increase in accounts receivable of $3,41
Million, a decrease in accounts payable of $3,83 Million and a decrease
in other assets of $0.65 Million.
At June 30, 2000 we had borrowings of $18,48 Million, this has increased
to $18,85 Million due to utilisation of funding in the working capital
cycle of the Lifestyle business.
Operations for the quarter ended September 30, 2000, excluding non-cash
charges resulted in the utilisation of $6,57 Million, primarily in the
utilisation of working capital in the Lifestyle business. Investing
activities undertaken by the group resulted in the untilisation of $1,36
Million primarily due to the acquisition of property, plant and equipment
of $1,52 Million by Lifestyle. Funding activities resulted in the
generation of $0,53 Million, primarily in short term borrowings to fund
working capital requirements of Lifestyle.
FUTURE COMMITMENTS
The cash receivable from the disposal of Lifestyle will fully fund the
redemption of the mandatory redeemable preference shares and the partial
redemption of the increasing rate debentures during the current fiscal
year. Excess cash will be utilised to fund additional acquisitions in the
Internet technology market sector.
The Company intends to continue to pursue an acquisition strategy in
Internet technology companies and anticipates utilising a substantial
portion of its remaining cash balances and the proceeds of its disposal
of Lifestyle to fund this strategy to the extent that suitable
acquisition candidates can be identified. On November 17, 2000 the
Company acquired substantially all of the assets and business of Fantasy
Sports, a division of goracing Interactive Services, Inc., for a purchase
consideration of $3.5 Million.
The Company may be required to incur additional indebtedness or equity
financing in connection with the funding of future acquisitions. There is
no assurance that the Company will be able to incur additional
indebtedness or raise additional equity to finance future acquisitions on
terms acceptable to management, if at all.
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The company does not ordinarily hold market risk sensitive instruments
for trading purposes. The company does however recognise market risk from
interest rate and foreign currency exchange exposure.
INTEREST RATE RISK
At September 30, 2000 the Company's cash resources earn interest at
variable rates. Accordingly the Company's return on these funds is
affected by fluctuations in interest rates. The debt of the continuing
operations is primarily at fixed interest rates. Any decrease in interest
rates will have a negative effect on the Company's earnings. There is no
assurance that interest rates will increase or decrease over the next
fiscal year.
FOREIGN CURRENCY RISK
The expected proceeds from the sale of Lifestyle will be received in
South African Rands. This exposes the Company to market risk with respect
to fluctuations in the relative value of the South African Rand against
the US Dollar. Due to the prohibitive cost of hedging these proceeds, the
exposure has not been covered as yet, should more favorable conditions
arise a suitable Rand hedge may be considered by management. For every 1%
decline in the Rand/US Dollar exchange rate, the Company loses R72,850 on
every R1,000,000 retained in South Africa, at the quarter-end exchange
rates, this is equivalent to $10,000. Subsequent to the quarter-end the
Rand has depreciated against the US Dollar by approximately 2,95% to
November 15, 2000.
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PART II - OTHER INFORMATION
ITEM 5: OTHER INFORMATION
Subsequent Events
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On October 11, 2000 (the "Closing Date"), First South Africa Holdings
PTY Ltd. ("FSA"), a wholly owned subsidiary of Leisureplanet Holdings, Ltd. (the
"Company") disposed of all of the assets of its majority owned subsidiary First
Lifestyle Holdings, Ltd., a South Africa corporation ("First Lifestyle")
pursuant to an Asset Purchase Agreement dated September 26, 2000 (the
"Agreement") between FSA and minority shareholders of First Lifestyle (the
"Sellers") and Ethos Private Equity, a South Africa corporation, Cornelius
Roodt, a director of the Company, and certain other purchasers (the
"Purchasers). Pursuant to the Agreement, the Sellers sold, and the Purchasers
purchased, all of the assets of First Lifestyle for an aggregate purchase price
of approximately $67,000,000 in cash, of which a pro rata share of approximately
$34,000,000 was paid to FSA.
The Company disclosed this transction on a Form 8-K filed with the
Securities and Exchange Commission on October 12, 2000 which included a pro
forma consolidated balance sheet assuming the sale of First Lifestyle and the
liquidation of LPI, Ltd. effective as of June 30, 2000.
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
11.1 Computation of (loss) earnings per share.
27.1 Financial Data Schedule
(b) Reports on Form 8-K filed during quarter ended September 30,
2000:
None.
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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.
Date: November 20, 2000
LEISUREPLANET HOLDINGS, LTD.
/s/ Clive Kabatznik
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Clive Kabatznik
Chief Executive Officer, President and
Chief Financial Officer
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