UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
/ X / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarter Ended June 30, 1997
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: 0-27256
ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD.
(Exact name of small business issuer as specified in its charter)
DELAWARE 65-0512785
(State or other jurisdiction of (I.R.S. Employer Identification number)
incorporation or organization)
2200 Corporate Boulevard, Suite 317, Boca Raton, Florida 33431
(Address of principal executive offices)
(561) 995-2190
(Registrant's telephone no., including area code)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15 (d) of the Securities Exchange Act of 1934 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 / / NO / X /
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date.
CLASS OUTSTANDING AS OF JUNE 30, 1997
- -------------------------------------- -------------------------------
Common Stock, $.001 par value 9,465,184
<PAGE>
TABLE OF CONTENTS
Heading Page
PART 1. - FINANCIAL INFORMATION
Item 1. Financial Statements .........................................1
Consolidated Balance Sheet - June 30, 1997 (Unaudited) .....2-3
Consolidated Statement of Operations (Unaudited)..............4
Consolidated Statement of Changes in Stockholders' Equity
(Unaudited) ..................................................5
Consolidated Statement of Cash Flows - Three months and
Six months ended June 30, 1996 and 1997 (Unaudited).........6-9
Notes to Consolidated Financial Statements (Unaudited)....10-11
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations ................................12-13
PART II. - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K ............................14
Signatures ..................................................15
Exhibit - 27 ................................................16
i
<PAGE>
PART 1
Item 1. Financial Statements
The following unaudited financial statements for the period ended June
30, 1997, have been prepared by Atlantic International Entertainment,
Ltd. (the "Company").
1
<PAGE>
ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD.
CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1997 (UNAUDITED)
June 30, 1997
-------------
(Unaudited)
ASSETS
CURRENT ASSETS
Cash in Bank $ 20,485
Accounts Receivable 1,850,218
Refundable Income Tax -
Prepaid Expenses 3,333
------------
TOTAL CURRENT ASSETS: 1,874,036
------------
Property and Equipment, at cost - Net of Accumulated
Depreciation and Amortization of $49,193 344,796
Software - Net of Accumulated Amortization of $172,437 1,176,016
OTHER ASSETS Investment in Subsidiary:
Customer Lists 1,374,687
Goodwill 162,000
------------
1,536,687
Accumulated Amortization 41,483
------------
1,495,204
Investments 52,962
Security Deposits 7,252
Organization Costs - (Net of Accum Amort of $645) 2,580
Due From Related Party 49,855
Due From Subsidiary -
Other Assets 1,302
Capital Lease Prepayments -
------------
TOTAL OTHER ASSETS 1,609,154
------------
TOTAL ASSETS $ 5,004,002
==============
See accompanying notes to financial statements
2
<PAGE>
ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD
CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1997
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES
Accounts Payable $ 366,339
Accrued Expenses 10,971
Customer Deposits 83,873
Current Portion of Long Term Debt 19,106
Taxes Payable 37,105
Other Current Liabilities 38,837
Due to Officers 11,946
-----------
TOTAL CURRENT LIABILITIES 568,177
OTHER LIABILITIES
Long Term Debt Net of Current 11,794
Total Other Liabilities 11,794
-----------
STOCKHOLDERS'S EQUITY:
Preferred Stock - Par Value $.001 Per Share, Authorized
10,000,000 Shares, None Issued or Outstanding -0-
Common Stock - Par Value $001 Per Share, Authorized
100,000,000 Shares, Issued and Outstanding 9,465,184 Shares 9,465
Additional Paid - in - Capital 3,949,444
Retained Earnings 465,122
-----------
Total Stockholders' Equity 4,424,031
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $5,004,002
==========
See accompanying notes to financial statements.
3
<PAGE>
ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------------------------------------------------------
1996 1997 1996 1997
----------------------------------------------------------------------
REVENUE
<S> <C> <C> <C> <C>
Consulting Fees $ 73,713 - $ 231,306 -
Software Sales and Related Charges - 1,010,030 - 1,614,278
Support Fees - 6,000 - 6,000
ISP and Website Income - 144,150 - 144,150
------------- --------- ---------- ---------
Total Revenue 73,713 1,160,180 231,306 1,764,428
COST OF SALES
Installation and Hardware Costs - 83,396 - 83,397
Internic Regist. Fees / Connect Fees - 50,040 - 50,040
------------- --------- ---------- ---------
Total - 133,436 - 133,437
GROSS PROFIT 73,713 1,026,744 231,306 1,630,991
OPERATING EXPENSES
General and Administrative 100,367 380,350 228,064 660,118
Amortization - 106,031 - 166,628
Depreciation 4,547 22,543 4,794 35,573
------------- --------- ---------- ---------
Total Operating Expenses 104,914 508,924 232,858 862,319
Income (Loss) From Operations (31,201) 517,820 (1,552) 768,672
OTHER INCOME (EXPENSE)
Interest Income - 1,134 - 3,736
Interest Expense - (1,077) - (1,368)
Income Tax (17,751) (60,210) (23,400) (119,068)
Loss on Sale of Investments - (20,785) - (20,784)
Gain on Sale of Investments 95,000 - 95,250 -
------------- ---------- ---------- ---------
Total Other Income (Expense) 77,249 (80,938) 71,850 (137,484)
Income From Continuing Operations 46,048 436,882 70,298 631,188
(Loss) from Operations of Discontinued
Foreign Subsidiary - - - (69,531)
Gain on Sale of Discontinued Foreign Subsidiary - - - 120,895
Total Income from Discontinued Operations - - - 51,364
NET INCOME $ 46,048 $ 436,882 $ 70,298 $ 682,552
Earnings to Date of Purchase
Retained Earnings (Deficit) - Beginning 183,089 28,240 158,839 (217,430)
Retained Earnings - Ending $ 229,137 $ 465,122 $ 229,137 $ 465,122
========== =========== ===================== ===================
(Loss) Income Per Common Share $ .007 $ 0.046 $ .010 $ 0.073
========== =========== ===================== ===================
Number of Shares 6,803,451 $ 9,465,184 6,803,451 9,357,934
========== =========== ===================== ===================
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock Additional
Number Paid - In
Shares Amount Capital
----------------------------------------
<S> <C> <C> <C>
Balance - December 31, 1996 $9,190,184 $9,190 $1,887,376
Sale of Common Stock (Reg S) 75,000 75 524,925
Recapitalization Costs - - (174,750)
Asset Acquisition (EmiNet) 200,000 200 1,599,800
Asset Acquisition Costs - - (920)
Consolidation Elimination-EmiNet - - 14,238
Income from Continuing Operations - - -
Disposal of Discontinued Operations - - 98,775
[Loss] from Discontinued Operations - - -
Balance - June 30, 1997 $9,465,184 $9,465 $3,949,444
==========================================
</TABLE>
<TABLE>
<CAPTION>
Retained Total
Earnings Preferred Stockholders'
(Deficit) Stock Equity
------------------------------------------
<S> <C> <C> <C>
Balance - December 31, 1996 $(217,430) $ $ 1,679,136
Sale of Common Stock (Reg S) - - 525,000
Recapitalization Costs - - (174,750)
Asset Acquisition (EmiNet) - - 1,600,000
Asset Acquisition Costs - - (920)
Consolidated Elimination-EmiNet - - 14,238
Income from Continuing Operations 631,188 - 631,188
Gain on Disposal of Discontinued Operations 120,895 - 219,670
[Loss] from Discontinued Operations (69,531) - (69,531)
----------------------------------------
Balance - June 30, 1997 $465,122 $ - $ 4,424,031
========================================
</TABLE>
See accompanying notes to financial statements
5
<PAGE>
ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD.
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED
---------------------------------
June 30, 1996 June 30, 1997
---------------------------------
OPERATING ACTIVITIES:
<S> <C> <C>
(Loss) Income From Continuing Operations $(48,952) $ 436,882
------------------------------
Cash Flows from Operating Activities:
Adjustments to reconcile net loss to net
Cash provided by operating activities:
Depreciation and amortization 4,547 128,574
Changes in operating assets and liabilities:
Decrease (increase) in:
Trade accounts receivable 1,500 (1,002,217)
Prepaid expenses and other current assets 8,055 37,486
Security Deposits (10,000) -
Investments - 56,681
Other assets 3,460
Increase (decrease) in:
Accounts payable and Accrued Expenses 670 93,787
Income taxes payable 17,751 37,105
Customer Deposits - 46,000
Other Current Liabilities - 38,836
------------------------------
Net cash - Continuing Operations - Forward (26,429) (123,406)
Discontinued Operations:
(Loss) from Discontinued Operations - -
Gain on Disposal of Discontinued Operations - -
Adjustments to reconcile Net (Loss) to Net Cash - -
Operations:
Depreciation - -
------------------------------
Changes in assets and liabilities:
(Increase) Decrease in: - -
Other Assets - -
Increase (Decrease) in:
Accounts Payable - -
Customer Deposits - -
Total Adjustments - -
------------------------------
Net Cash - Discontinued Operations - Forward - -
------------------------------
Net Cash - Operating Activities - Forward (26,429) (123,406)
------------------------------
Investing Activities - Continuing Operations
Net increase in due from related parties - (737)
Net increase (decrease) in Other Receivable (44,788) -
Sale (Purchase) of Subsidiary (10,000) -
Sale (Purchase) of Investments 105,000 35,897
Sale (Purchase) of property and equipment (37,079) (167,927)
------------------------------
Net cash used in investing activities - Forward 13,133 (132,767)
</TABLE>
See accompanying notes to financial statements
6
<PAGE>
ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD.
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED JUNE 30,
---------------------------------
1996 1997
---------------------------------
Investing Activities - Discontinuing Operations
<S> <C> <C>
(Purchase) Disposition of property and equipment - -
-------- -----------
Net Cash Investing Activities 13,133 (132,767)
-------- -----------
Financing Activities - Continuing Operations
Proceeds from issuance of common stock -
Increase in loan payable to shareholder 27,500 -
Additions to paid in capital 38,303 14,238
Increase in equipment loans - 30,900
Principal payments on capitalized lease and not borrowing - (7,265)
-------- -----------
Net cash - Financing Activities - Continuing Operations 65,803 37,873
Financing Activities - Discontinued Operations
Additions to Additional paid in Capital - -
-------- -----------
Net Cash Financing Activities 65,803 37,873
-------- -----------
Increase (Decrease) in cash and cash equivalents 52,507 (218,300)
Cash & cash equivalents beginning of period 157,682 238,785
-------- -----------
Cash & cash equivalents, end of period $210,189 $ 20,485
======== ==========
Supplemental disclosure of cash flow information:
Cash paid (received) during
the period for:
Interest Expense $ - $ 1,077
Income Tax Refund (Applied) $ - $(23,100)
Income Tax $ 17,751 $ 60,210
</TABLE>
See accompanying notes to financial statements
7
<PAGE>
ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD.
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED
-------------------------------
June 30, 1996 June 30, 1997
-------------------------------
OPERATING ACTIVITIES:
<S> <C> <C>
(Loss) Income From Continuing Operations $(24,952) 631,188
------------ -----------
Cash Flows from Operating Activities:
Adjustments to reconcile net loss to net
Cash provided by operating activities:
Depreciation and amortization 4,794 202,201
Changes in operating assets and liabilities:
Decrease (increase) in:
Trade accounts receivable (35,250) (1,850,217)
Prepaid expenses and other current assets 8,397 77,436
Security Deposits (11,000) -
Investments - 56,681
Other assets - 3,231
Increase (decrease) in:
Accounts payable and Accrued Expenses 5,600 139,173
Income taxes payable 1,400 37,105
Customer Deposits - 83,242
Other current liabilities 38,836
-------------------------------
Net cash - Continuing Operations - Forward (51,011) (581,124)
Discontinued Operations:
(Loss) from Discontinued Operations - (69,531)
Gain on Disposal of Discontinued Operations - 120,895
Adjustments to reconcile Net (Loss) to Net Cash - -
Operations:
Depreciation - 1,366
Changes in assets and liabilities:
(Increase) Decrease in:
Other Assets - 815
Increase (Decrease) in:
Accounts Payable - (14,808)
Customer Deposits - (27,648)
-------------------------------
Total Adjustments - (41,641)
-------------------------------
Net Cash - Discontinued Operations - Forward - 11,089
-------------------------------
Net Cash - Operating Activities - Forward (51,011) (570,035)
-------------------------------
Investing Activities - Continuing Operations
Net increase in due from related parties (31,000) (1,582)
Net increase (decrease) in Other Receivable (19,788) -
(Purchase) of Subsidiary (10,250) (1,620,000)
Sale (Purchase) of Investments 105,500 (73,746)
Sale (Purchase) of property and equipment (49,742) (222,719)
-------------------------------
Net cash used in investing activities - Forward (5,280) (1,918,047)
</TABLE>
See accompanying notes to financial statements
8
<PAGE>
ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD.
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED JUNE 30,
1996 1997
Investing Activities - Discontinuing Operations
<S> <C> <C>
(Purchase) Disposition of property and equipment - 11,110
-------------------------
Net Cash Investing Activities (5,280) (1,906,937)
-------------------------
Financing Activities - Continuing Operations
Proceeds from issuance of common stock - 1,949,330
Increase in loan payable to shareholder 27,500 (9,709)
Additions to paid in capital 14,238
Increase in equipment loans 38,303 30,900
Principal payments on capitalized lease and not borrowing - (7,265)
-------------------------
Net cash - Financing Activities - Continuing Operations 65,803 1,977,494
Financing Activities - Discontinued Operations
Additions to Additional paid in Capital - 98,775
-------------------------
Net Cash Financing Activities 65,803 2,076,269
-------------------------
Increase (Decrease) in cash and cash equivalents 9,512 (400,703)
Cash & cash equivalents beginning of period 200,677 421,188
Cash & cash equivalents, end of period $210,189 $ 20,485
=========================
Supplemental disclosure of cash flow information:
Cash paid (received) during the period:
Interest $ - 1,368
Income Tax Refund (Applied) $ - (77,215)
Income Tax $ 23,400 $119,068
</TABLE>
See accompanying notes to financial statements
9
<PAGE>
ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD.
Notes to Consolidated Financial Statements (Unaudited)
June 30, 1997
Note 1 - BASIS OF PREPARATION
The accompanying unaudited interim financial statements
include all adjustments (consisting only of those of a normal
recurring nature) necessary for a fair statement of the
results for the interim periods. The results of operations and
cash flows for the six month period ended June 30, 1997, are
not necessarily indicative of the results of operations or
cash flows to be reported for the full year ending December
31, 1997.
Note 2 - BUSINESS COMBINATION
On July 16, 1996, the Company entered into an Exchange of
Stock Agreement and Plan of Reorganization ( the "Stock
Exchange Agreement"). Under the terms of the Stock Exchange
Agreement, the Company acquired all of the shares of Atlantic
International Capital, Ltd. ("Atlantic Capital"), a Delaware
corporation, in exchange for an aggregate of 25,183,759 shares
of its common stock, of which 7,000,000 shares were
immediately issuable and 18,153,759 shares were to be issued
following an increase in the Company's authorized capital. The
Company plans to satisfy this obligation by issuing
approximately 6,061,253 shares of Common Stock to the former
Atlantic Capital stockholders following a 1-for-3 share
exchange upon the consummation of a merger with and into its
wholly-owned subsidiary, Atlantic International Entertainment,
Ltd. which was approved by the Company's stockholders on
November 18, 1996. Upon consummation of the merger, the
Company's authorized capital will increase to 100,000,000
shares of Common Stock, $.001 par value and 10,000,000 shares
of Preferred Stock, $.001 par value. The combination has been
accounted for as a reverse acquisition, and the combined
entity intends to operate under the name Atlantic
International Entertainment, Ltd. The consolidated balance
sheet as of March 31, 1997 does not reflect the effects of the
recapitalization, issuance of the additional common shares, or
the reverse stock split, all of which were approved by the
stockholders on November 18, 1996.
CEEE has conducted only limited operations prior to 1984, and
has been substantially inactive since that time. It previously
considered itself to be a development stage company as defined
in Statement of Financial Accounting Standards No.7.
Note 3 - BUSINESS ACQUISITIONS
The business acquisition in the first quarter of 1997 has been
accounted for under the purchase method. The results of
operations of the acquired business are included in the
consolidated financial statements from the date acquisition
March 26, 1997, the Company concluded its acquisition of 100%
of the outstanding stock of The EmiNet Domain, Inc., located
in Boynton Beach, Florida. EmiNet is an Internet Service
Provider (ISP), and developer of Internet related software
products as well as hosting commercial Web sites. The Company
paid $20,000 in cash and issued 200,000 shares of the
Company's common stock (approximate market value on date of
issue $2,000,000). The Stock Purchase Agreement also contains
additional payments contingent on the future earnings
performance of EmiNet. Any additional payments made, when the
contingency is resolved, will be accounted for as additional
costs of the
10
<PAGE>
ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD.
Notes to Consolidated Financial Statements (Continued)
June 30, 1997
acquired assets and amortized over the remaining life of the
assets. No payments were paid or accrued for the second
quarter 1997.
The following unaudited pro forma consolidated results of
operations for the years ended December 31, 1996 and 1995 are
presented as if the EmiNet acquisition has been made at the
beginning of each period presented. The EmiNet Domain, Inc.
operated as an S Corporation in 1995 and 1996. Included in the
expenses to arrive at Net Earnings are reclassifications of
Shareholders' Draw to Officers Salaries and Income Tax Expense
in the amounts of $26,200 for the short year 1995 and $132,200
for 1996. The unaudited pro forma information is not
necessarily indicative of either the results of operations
that would have occurred had the purchase been made during the
periods presented or the future results of the combined
operations.
Years ended December 31
1996 1995
-------------------------
Net Sales $ 878,097 $ 818,317
Net earnings (Loss) $ (347,072) $ 178,816
Earnings per common share
And common share equivalent $ (.04) $ .02
Note 4 - MAJOR CUSTOMERS
Income fees derived from major customers are tabulated as
follow:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------------------------------------------------
1996 1997 1996 1997
---- ---- ---- ----
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Customer A - (Consulting) 8,000 - $ 28,000 -
Customer B - (Consulting) 12,000 - 21,500 -
Customer C - (Consulting) 48,500 - 131,000 -
Customer D - (Software System) - - - 600,000
Customer E - (Software System) - 410,000 - 410,000
Customer F - (Software System) - 450,000 - 450,000
Customer G - (Software System) - 150,000 - 150,000
</TABLE>
Note 5 - PER SHARE DATA
Per share data are based on the weighted average number of
common shares outstanding during the respective periods,
retroactively adjusted to reflect the common shares issued in
exchange for all outstanding common shares of The EmiNet
Domain, Inc., including the additional shares sold pursuant to
a "Reg S" offering in February, 1997.
11
<PAGE>
ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD.
June 30, 1997
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following management's discussion and analysis of
financial condition and results of operations contains forward
looking statements that involve risks and uncertainties. The
Company's actual results could differ materially from those
anticipated in these forward looking statements as a result of
certain factors discussed herein.
RECENT DEVELOPMENTS
On February 5, 1997, the Company entered into an agreement to
purchase The EmiNet Domain, Inc. ("EmiNet Domain") a Boynton
Beach, Florida based Internet Service Provider and Developer
of Internet related software products. The purchase price of
$1,620,000 was paid in cash and stock. The purchase price
recorded reflects a discount in relation to the approximate
fair market value of the stock to take into consideration
certain restrictions placed upon the stock when issued.
The purchase of EmiNet Domain's Commercial Web-hosting and ISP
base will bring a significant benefit to the Company's
non-gaming Internet products, furthermore, the Internet
software development capabilities of EmiNet will augment the
Company's on-going gaming product development activities.
On March 23, 1997, the Company entered into an Agreement to
sell its Netherland Antilles based subsidiary, Atlantic
International Entertainment, NV. To Australian Advisors
Corporation, a Bahamian corporation. Terms of the sale call
for Australian Advisors Corporation to purchase 100% of the
stock and assets of the subsidiary, including its license
agreement for one webSports(TM)system.
In addition to the sale of the Company's subsidiary, a license
agreement for one Internet Casino Extension(TM) (ICE(TM)) was
also purchased for $600,000.
On January 16, 1997, a Stock Purchase Agreement was signed
with Brindenberg Securities, A/S under Regulation S under the
Securities Act of 1933, as amended. A total of 75,000 shares
were issued under this agreement.
OVERVIEW
During the second quarter of 1997, the Company continued its
marketing campaign of its Internet products and the results of
operations reflect the installation and operation of two
Internet Casino Extension(TM)(ICE(TM)) systems and one
webSports(TM) system. Support contracts for these systems are
expected to generate an additional monthly income stream of
$4,500 for the next forty-eight months. Product development
continues as additional features are added to existing
products and additions are made at the customer's request. The
Company anticipates continued market leadership in the systems
offered and anticipate an additional investment in the
development and upgrades of our products of approximately
$400,000 over the next twelve months.
EmiNet Domain, a wholly-owned subsidiary of the Company, is in
the process of upgrading its hardware and software in order to
better compete with area Internet service providers by
offering the latest technology and system features. An
aggressive marketing campaign aimed at capturing a larger
portion of the market is expected to begin in the fourth
quarter.
The Company expects to see considerable interest building in
its Internet products. The Company has executed contracts and
is in the process of installing four Internet Casino
Extension(TM) (ICE(TM)) systems as well as four webSports(TM)
systems and it is anticipated that such installations will be
complete by the close of the third quarter. This is expected
to generate sales in excess of $2,000,000 for the quarter. In
addition, these installations are expected to generate monthly
income from support and maintenance agreements in excess of
$10,000 per month over the next forty-eight months.
12
<PAGE>
ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD.
June 30, 1997
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
The Company has recently entered into a pilot program in order
to ascertain the viability of entering additional markets in
areas such as Australia. The Company believes the program will
be successful and that it will lead to opening a significant
market for our systems.
As the Company grows, it will continue to add key personnel in
the development, support and sales areas.
RESULTS OF OPERATIONS
The Company incurred expenses of $660,118 in the six months
ended June 30, 1997. Such expenses were primarily attributable
to marketing the Company's Internet products as well as
continued development of its Internet products.
During the six month period ended June 30, 1997, the Company
had net income of $682,552, of which EmiNet Domain contributed
$2,500 in profits. Revenue was $1,764,428 for the second
quarter of which EmiNet contributed $143,980.
Other income (expenses) included the gain on the sale of its
Netherland Antillies based subsidiary, Atlantic International
Entertainment N.V., Ltd. of $120,895. The net (Loss) generated
by this subsidiary for the first quarter 1997 operations until
sale was ($69,531).
During 1997 funds of $350,250 were generated from the sale of
75,000 shares of common stock.
In the opinion of management, inflation has not had a material
impact on the operation of the Company.
13
<PAGE>
ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD.
PART II
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule
(b) Reports on Form 8-K
The Company filed with the Commission, a report on Form
8-K dated March 7, 1997, reporting the acquisition of
100% of the outstanding stock of The EmiNet Domain,
Inc. For financial statement reporting purposes, this
transaction is being reported as a purchase.
14
<PAGE>
In accordance with the requirements of the Securities Exchange Act of
1934, the Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Atlantic International Entertainment, Ltd.
Date: September 8, 1997 By: /s/ Richard A. Iamunno
-----------------------------
(Signature)
Richard A. Iamunno, President
And Chief Executive Officer
Date: September 8, 1997 By: /s/ David P. Halaburda
-----------------------------
(Signature)
David P. Halaburda
Chief Financial Officer
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ATLANTIC
INTERNATIONAL ENTERTAINMENT, LTD.'S FINANCIAL STATEMENTS AS OF JUNE 30, 1997 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND
NOTES.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 20,485
<SECURITIES> 0
<RECEIVABLES> 1,850,217
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,874,036
<PP&E> 1,742,442
<DEPRECIATION> 221,630
<TOTAL-ASSETS> 5,004,002
<CURRENT-LIABILITIES> 568,176
<BONDS> 0
<COMMON> 9,465
0
0
<OTHER-SE> 4,414,566
<TOTAL-LIABILITY-AND-EQUITY> 5,004,002
<SALES> 1,764,428
<TOTAL-REVENUES> 1,764,428
<CGS> 133,436
<TOTAL-COSTS> 862,319
<OTHER-EXPENSES> 20,784
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,368
<INCOME-PRETAX> 801,620
<INCOME-TAX> 119,068
<INCOME-CONTINUING> 631,188
<DISCONTINUED> 51,364
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 682,552
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
