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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 March 31, 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)
Registrant's telephone no., including area code: (561) 995-2190
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 March 31, 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 - March 31, 1997 (Unaudited) .........2
Consolidated Statement of Operations.............................3
Consolidated Statement of Changes in Stockholders' Equity .......4
Consolidated Statement of Cash Flows - Three months ended
March 31, 1997 (unaudited).................................... 5-6
Notes to Consolidated Financial Statements (Unaudited)........ 7-9
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations ...................................10-11
PART II. - OTHER INFORMATION
Item 1. Legal Proceedings ..............................................12
Item 2. Changes In Securities...........................................12
Item 3. Defaults Upon Senior Securities.................................12
Item 4. Submission of Matters to a Vote of Securities Holders ..........12
Item 5. Other Information ..............................................12
Item 6. Exhibits and Reports on Form 8-K ...............................12
Signatures .....................................................13
<PAGE>
PART 1
Item 1. Financial Statements
The following unaudited financial Statements for the period
ended March 31, 1997, have been prepared by Atlantic
International Entertainment, Ltd. (the "Company").
ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD.
Financial Statements
March 31, 1997
<PAGE>
ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD.
CONSOLIDATED BALANCE SHEET (UNAUDITED)
AS OF MARCH 31, 1997
<TABLE>
<CAPTION>
March 31, 1997
--------------------
(Unaudited)
ASSETS
<S> <C>
CURRENT ASSETS
Cash in Bank $ 238,785
Accounts Receivable 848,000
Refundable Income Tax 23,100
Prepaid Expenses 17,720
----------
Total Current Assets: 1,127,605
----------
Property and Equipment, at Cost - Net of Accumulated
Depreciation and Amortization of $32,753 388,244
Software - Net of Accumulated Amortization of $108,050 1,003,808
OTHER ASSETS
Investments 109,643
Due From Related Parties 49,118
Organization Costs - Net of Accumulated Amortization of $484 2,741
Security Deposits 4,051
Other Assets 1,043
Investment in Subsidiary:
Net Fixed Assets 83,313
Customer Lists 1,374,687
Goodwill 162,000
----------
Total Other Assets 1,786,596
Total Assets $4,306,253
==========
Liabilities and Stockholders'Equity:
CURRENT LIABILITIES
Accounts Payable $ 229,696
Accrued Expenses 53,827
Customer Deposits 37,873
Due to Officers 11,946
----------
Total Current Liabilities $ 333,342
SHAREHOLDERS'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 3,935,206
Retained Earnings 28,240
----------
Total Stockholders' Equity 3,972,911
----------
Total Liabilities and Stockholders' Equity $4,306,253
==========
</TABLE>
See accompanying notes to financial statements.
2
<PAGE>
ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For The Three Months Ended
March 31,
------------------------------------
1997 1996
----------- -----------
<S> <C> <C>
REVENUE
Consulting Fees $ -- $ 157,593
Software Sales 604,248 --
----------- -----------
Total Revenue 604,248 157,593
OPERATING EXPENSES
General and Administrative 279,768 127,697
Amortization 60,597 --
Depreciation 13,030 247
----------- -----------
Total Operating Expenses 353,395 127,944
Income From Operations 250,853 29,649
OTHER INCOME (EXPENSE)
Income Tax Expense (58,858) (5,649)
Interest Expense (291) --
Gain on Sale of Investments -- 250
Interest Income 2,602 --
----------- -----------
Total Other Income (Expense) (56,547) (5,399)
Income From Continuing Operations 194,306 24,250
(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 $ 245,670 $ 24,250
Retained Earnings - Beginning (217,430) 158,839
----------- -----------
Retained Earnings - Ending $ 28,240 $ 183,089
=========== ===========
(Loss) Income Per Common Share $ 0.026 $ 0.003
=========== ===========
Number of Shares 9,357,934 8,514,537
=========== ===========
</TABLE>
See accompanying notes to financial statements.
3
<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)
Income from Continuing Operations -- -- --
Disposal of Discontinued Operations -- -- 98,775
[Loss] from Discontinued Operations -- -- --
--------------------------------------------------------
Balance - March 31, 1997 9,465,184 $ 9,465 $ 3,935,206
========================================================
</TABLE>
<TABLE>
<CAPTION>
Total
Accumulated 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)
Income from Continuing Operations 194,306 -- 194,306
Gain on Disposal of Discontinued Operations 120,895 -- 219,670
[Loss] from Discontinued Operations (69,531) -- (69,531)
--------------------------------------------------------
Balance - March 31, 1997 $ 28,240 $ -- $ 3,972,911
========================================================
</TABLE>
See accompanying notes to financial statements
4
<PAGE>
ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD.
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months
March 31, 1997
<S> <C>
Operating Activities:
(Loss) Income From Continuing Operations $ 194,306
-----------
Cash Flows from Operating Activities:
Adjustments to reconcile net loss to net
Cash provided by operating activities:
Depreciation and amortization 73,627
Changes in operating assets and liabilities:
Decrease (increase) in:
Trade accounts receivable (848,000)
Prepaid expenses and other current assets 39,950
Other assets (229)
Increase (decrease) in:
Accounts payable and Accrued Expenses 45,386
Income taxes payable --
Customer Deposits 37,242
-----------
Net cash - Continuing Operations - Forward (457,718)
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 (446,629)
-----------
Investing Activities - Continuing Operations
Net increase in due from related parties (845)
Increase in Other Receivable --
(Purchase) of Investments (1,620,000)
(Purchase) of Investments (109,643)
Purchase of property and equipment (54,792)
-----------
Net cash used in investing activities - Forward (1,785,280)
</TABLE>
5
<PAGE>
ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD.
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINED)
<TABLE>
<CAPTION>
Three Months
March 31, 1997
<S> <C>
Investing Activities - Discontinuing Operations
(Purchase) Disposition of property and equipment 11,110
-----------
Net Cash Investing Activities (1,774,170)
-----------
Financing Activities - Continuing Operations
Proceeds from issuance of common stock 1,949,330
Increase in loan payable to shareholder (9,709)
-----------
Net cash - Financing Activities - Continuing Operations 1,939,621
Financing Activities - Discontinued Operations
Additions to Additional paid in Capital 98,775
-----------
Net Cash Financing Activities 2,038,396
-----------
Increase (Decrease) in cash and cash equivalents (182,403)
Cash & cash equivalents beginning of year 421,188
===========
Cash & cash equivalents, end of year $ 238,785
===========
Supplemental disclosure of cash flow information: Cash paid (received) during
the year for:
Interest $ 291
Income Tax Refund (Applied) $ 58,858
</TABLE>
See accompanying notes to financial statements
6
<PAGE>
ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD.
Notes to Consolidated Financial Statements (Uunaudited)
March 31, 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 three month period ended March 31, 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.
7
<PAGE>
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 of
acquisition.
On 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 acquired assets and amortized over the remaining
life of the assets.
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:
Three Months Ended
March 31,
----------------------------
1996 1997
---- ----
(Unaudited) (Unaudited)
Customer A - (Consulting) $ 20,000 -
Customer B - (Consulting) 9,500 -
Customer C - (Consulting) 83,000 -
Customer D - (Software System) - 600,000
8
<PAGE>
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.
9
<PAGE>
ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Recent Developments
On February 5, 1997, the Company entered into an agreement to
purchase The EmiNet Domain, Inc., a Boynton Beach, Florida
based Internet Service Provider and Developer of Internet
related software products. The purchase price of $1,620,000
was payable in cash and stock. The purchase price recorded
reflects a discount in relation to the approximate fair market
value to take into consideration certain restrictions placed
upon the stock when issued.
The purchase of The 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 of the
Securities & Exchange Commission. A total of 75,000 shares
were issued under this agreement.
Results of Operations
The Company incurred expenses of $279,768 in the three months
ended March 31, 1997. Such expenses were primarily
attributable to marketing the Company's Internet products as
well as continued development of its Internet products.
During the three month period ended March 31, 1997, the
Company had net income of $245,670. Revenue was $604,248 for
the first quarter as the Company focused its attention on
marketing its Internet Products.
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).
10
<PAGE>
ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (Continued)
Results of Operations (Continued)
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.
11
<PAGE>
ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD.
PART II
Item 1. Legal Proceedings
There are presently no materials pending legal proceedings in
which the Company is a party or to which any of its property
is subject.
Item 2. Changes in Securities
This Item is not applicable to the Company.
Item 3. Defaults upon Senior Securities
This Item is no applicable to the Company.
Item 4. Submission of Matters to a Vote of Security Holders
This Item is not applicable to the Company.
Item 5. Other Information
This Item is not applicable to the Company.
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.
12
<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: August 27, 1997 By: /s/ Richard A. Iamunno
---------------------------------------
(Signature)
Richard A. Iamunno, President
And Chief Executive Officer
Date: August 27, 1997 By: /s/ David Halaburda
---------------------------------------
(Signature)
David Halaburda
(Principal Financial and
Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ATLANTIC
INTERNATIONAL ENTERTAINMENT LTD's FINANCIAL STATEMENTS AS OF MARCH 31, 1997 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 238,785
<SECURITIES> 0
<RECEIVABLES> 848,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,127,605
<PP&E> 1,532,855
<DEPRECIATION> 140,803
<TOTAL-ASSETS> 4,306,253
<CURRENT-LIABILITIES> 333,342
<BONDS> 0
<COMMON> 9,465
0
0
<OTHER-SE> 3,963,446
<TOTAL-LIABILITY-AND-EQUITY> 4,306,253
<SALES> 604,248
<TOTAL-REVENUES> 604,248
<CGS> 0
<TOTAL-COSTS> 353,395
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 291
<INCOME-PRETAX> 304,528
<INCOME-TAX> (58,858)
<INCOME-CONTINUING> 194,306
<DISCONTINUED> 51,364
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 245,670
<EPS-PRIMARY> 0.026
<EPS-DILUTED> 0.026
</TABLE>
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