Securities and Exchange Commission
Washington, D.C., 20549
FORM 10-KSB
Annual Report Pursuant To Sections 13 Or 15 (D)
Of The Securities Exchange Act Of 1934
For the Fiscal Year Ended December 31, 1997
Filed Pursuant To Sections 13 Or 15(D) Of The Securities Exchange Act of 1934
Securities and Exchange Commission File Number O-28416
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SBI Communications, Inc.
(Name of small business issuer specified in its charter)
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Delaware 58-1700840
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
Post Office Box 729
103 Firetower Road (912) 759-0701
Leesburg, GA 31763 Issuer's telephone number
(Address of Principal executive offices) (Zip code)
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Securities registered pursuant to Section 12(b) of the Act: None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, Par value $0.001 - Preferred Stock, Par Value $5.00
(Title of Class)
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
requirement for the past 90 days. YES [X] NO [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-B is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definite proxy or information statements
incorporation by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. YES [X] NO [ ]
<TABLE>
<CAPTION>
<S> <C>
Registrant's revenues for its most current fiscal year: $544,662.00
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Aggregate market value of the voting stock held by non-affiliates as of April 30, 1998: $1,336,360.00
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Number of common shares outstanding as of latest practical date at $.001 par value: 5,345,430
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</TABLE>
Documents Incorporated By Reference: None
Location of Exhibit Index: The index of exhibits is contained in part IV herein
on page number 49.
Transitional Small Business Disclosure Format: Yes [ ] No [X]
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Dated April 30, 1998
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Table of Contents
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Item Page
Number Number Item Caption
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Part I
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Item 1. 3 Description of Business
Item 2. 15 Description of Properties
Item 3. 16 Legal Proceedings.
Item 4. 16 Submission of Matters to a Vote of Security Holders
Part II
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Item 5. 16 Market Price of and Dividends on the Registrant's Common
Equity and other Shareholder Matters
Item 6. 22 Management's Discussion and Analysis or Plan of Operation
Executive Compensation
Item 7. 25 Financial Statements and Summary Financial Data
Item 8. 33 Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
Part III
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Item 9. 34 Directors, Executive Officers, Promoters and Control
Persons
Item 10. 42 Executive Compensation
Item 11. 44 Security Ownership of Certain Beneficial Owners and
Management
Item 12. 45 Certain Relationships and Related Transactions
Part IV
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Item 13. 45 Exhibits, Financial Statement Schedules, and Reports on
Form 8-K
Signatures 49
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Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 2
<PAGE>
Part I
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Item I. Description of Business
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General
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SBI Communications, Inc., a publicly held Delaware corporation (the
"Registrant"), was originally organized in the State of Utah on September 23,
1983, under the corporate name Alpine Survival Products, Inc. Its name was
changed to Justin Land and Development, Inc., during October of 1984, and to
Supermin, Inc., on November 20, 1985.
The Registrant was originally formed to engage in the acquisition of any
speculative investment or business opportunity without restriction as to type or
classification. On September 29, 1986, Supermin, Inc., concluded a
reorganization under Section 368(a)(1)(B) of the Internal Revenue Code of 1954,
as amended, pursuant to which it exchanged 200,000 shares of its common stock,
$.001 par value (all shares numbers used in this registration statement are,
unless otherwise stated, adjusted to reflect a one for 20 reverse stock split)
for all of the capital stock of Satellite Bingo, Inc., a Georgia corporation
organized on January 10, 1986, and the originator of the Registrant's current
business (the "SBI Subsidiary"). In conjunction with such reorganization, the
former stockholders of the SBI Subsidiary, acquired control of the Registrant
and the Registrant changed its name to Satellite Bingo, Inc.
On March 10, 1988, the Registrant changed its name to SBI Communications, Inc.,
its current name, and on January 28, 1993, the Registrant reincorporated into
Delaware through a statutory merger with a wholly owned Delaware subsidiary in
reliance on the exemption from registration requirements of Section 5 of the
Securities Act of 1933, as amended, provided by Rule 145(a)(2) promulgated
thereunder.
The Registrant has two subsidiaries, SBI Communications, Inc., an Nevada
corporation; and, Satellite Bingo, Inc., a Georgia corporation. As used in this
registration statement, unless the context requires otherwise, the term
"Registrant" includes SBI Communications, Inc., a publicly held Delaware
corporation, and, its subsidiaries, predecessors and affiliates whose operations
or assets have been taken over by SBI Communications, Inc., a publicly held
Delaware corporation.
A report by the National Association of Fund-raising Ticket Manufacturers
estimated that in 1992 annual gross receipts to charities in the U. S. from
charity bingo games were approximately $2.6 billion. Industry groups estimate
the growth rate of the industry at more than 10% annually. Management therefore
estimates the U. S. charitable bingo market currently totals approximately $5
billion in annual receipts. Thus, while the charity bingo market is only a small
percentage of the total U. S. gaming market, the Company believes that charity
bingo is, and will continue to be, an attractive, growing market segment,
despite the proliferation of alternative gaming options available to the public.
Management believes that the U. S. commercial bingo
Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 3
<PAGE>
industry will remain attractive due to: i) increased customer recognition and
participation; ii) favorable demographic trends, including an aging population
with increasing disposable income; iii) reduced governmental funding of
charities due to budgeting pressures; iv) the trend towards legalization of
gaming activities; and v) the requirement in most jurisdictions that charity
lessors operate commercial bingo centers and retain responsibility for all
staffing and marketing costs. Management is also confident that the Company will
prosper in the bingo industry based on: i) management's industry and operational
experience; ii) the Company's early entry into the nationally fragmented bingo
market, with no competition on a similar scale; and iii) the Company's
positioning of its bingo centers in demographically and economically desirable
markets, primarily in the southern part of the U. S.
Business Overview
Although state regulations vary, the Company's basic operation is as follows.
The Company identifies and analyzes desirable bingo markets that offer favorable
population and income demographics. After the Company selects an attractive
market for expansion, the Company determines whether it would be more desirable
to build a new bingo center or acquire an existing center, if one exists.
Building and finishing out a new commercial center, which typically costs
$100,000 - $250,000, is often less expensive than acquiring an existing center
and allows the Company to potentially earn a higher rate of return and
accelerated payback on its investment. Conversely, acquisitions typically cost
more than building a comparable new center, but offer certain advantages over
building, including: i) greater predictability of investment return since the
center's past performance is known, ii) no dilution of the existing bingo market
through the addition of another bingo center, and iii) preservation of the
Company's cash resources (if the acquisition is funded in whole or in part with
seller-financed notes and/or Company stock. The Company will continue to expand
through both developments and acquisitions. The Company will only pursue
acquisitions of desirable halls that offer proven cash flows and opportunities
for enhanced financial performance. Concurrent with new bingo center development
or acquisitions, the Company will acquire all necessary operating permits and
licenses from the appropriate state or local municipality.
After the company selects a site for development or acquisition and initiates
legal fulfillment activities, the Company then contacts local charities to
promote the Fund-raising possibilities which charity bingo provides. When
selecting charities, the Company considers such factors as; i) the charitable
cause and presence in the local community; ii) the background of charity
officers or trustees; and iii) a charity's financial stability. Once charity
selection is complete, the Company assists the charities in the development of
an operating plan consistent with current regulations, which may include the
creation of a bingo management team comprise of representatives from the
participating charities. The management team hires and oversees center employees
and volunteers, sets up an accounting system and bank accounts, and hires a
center manager/head cashier who manages the center. Lease agreements between the
Company and the charities are typically structured on an annual basis, with
cancellation options for both parties. The Company believes that short term
leases allow it to limit commitments to under-performing charities.
Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 4
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After the bingo center is opened, the Company continues to act as a
consultant/service provider to the participating charities, as well as property
manager for the building in which the bingo games are held. The Company's role
is to ensure profitable operation of the center and help resolve any conflicts
that may arise. The Company's primary income is derived from rental payments
from the charities for the lease of the building and equipment for bingo
sessions at the center. These rental payments are generally controlled by state
or local regulations and typically place a cap or ceiling on the amount to be
realized by the Company per session (See Item 1 - Government Regulation). The
participating charities keep the net proceeds after payment of rent to the
Company and payroll costs to the bingo center employees. Additional income may
also be earned by the Company through vending and concessions operations, the
sale of bingo paper and supplies at certain of the centers and revenues from
video gaming, where legal.
The thrust of most applicable state or local regulations is to make
participating charities responsible for the direct operation of the bingo center
and employment and payment of personnel. These regulations generally prohibit
management control by the Company, which reduces the Company's staffing
obligations and expenses. In addition, most states require that participating
charities be responsible for all marketing and advertising activities and
expenses. The Company's role as consultant/service provider does permit it to
advise in the selection of key employees and the formulation and execution of a
center's business plan.
The Company normally bears responsibility for all non-personnel and
non-advertising costs of a bingo center, including property rental, finish-out
of the property for bingo operations, bingo supplies, janitorial services,
utilities, maintenance and repairs, security, property taxes, permits and
insurance. The Company must be able to cover these expenses, plus corporate
overhead, from its charity rental payments in order to earn a profit. However,
as a center becomes better established and more profitable, the Company
transfers a portion of these expenses to the participating charities. The
Company's objective is to allow the operation to run on a "turnkey" basis by the
charities to the extent possible. However, because of the Company's substantial
investment in opening a bingo center and significant continued commitment in
funding operating and overhead costs, the Company must maintain an advisory role
with respect to its bingo center operations. The Company and participating
charities each has a vested stake in making sure that operations are conducted
in a mutually profitable way. The Company's objective is to ensure maximum
proceeds from center operations, which allows charities to generate substantial
funds, and, in turn, allows the Company to earn the maximum legal rent from
leasing its properties to charities.
Current Operations
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The Company's bingo center strive to offer first class facilities and amenities,
are committed to customer satisfaction and offer generous charity support. The
Company believes that these principles, together with the Company's management
experience, site selection methodology and ability to raise capital, distinguish
the Company from direct competition and allow the Company and its charities to
mutually prosper. The Company's participating charities raised approximately
$300,000 proceeds in 1996 and 1997. The Company's current operations and
potential expansions will likely remain focused on the southern part of the
Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 5
<PAGE>
U. S. which offers favorable demographics and logistical advantages to the
Company. A brief description of the Company's current operations is as follows.
Alabama (One) bingo center)
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The Company owns and leases a hall for bingo operations in Piedmont, Alabama
that have been in existence since 1994, respectively. Bingo in Alabama is
regulated at the local level with varying laws between counties and cities. Most
local laws provide limits on the number of weekly charity sessions that can be
conducted except in Piedmont with no limits and ten hour sessions, five days a
week.
Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 6
<PAGE>
Expansion Plans
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The Company continuously reviews industry developments and regulations for
potential expansion opportunities. It plans to acquire or develop bingo centers
in markets that meet the Company's financial, legal, operational and demographic
selection criteria. The Company will continue to target those states that have
enacted legislation enabling charities to raise money through bingo and gaming
events. Such states recognize that most charities lack the investment capital
and/or business acumen to independently establish such centers. These states
have provided a regulatory structure that allows commercial lessors such as the
Company to act as landlord and source provider to the charities. The Company
operates within this regulatory structure and essentially provides the charities
with the expertise needed to open and operate a profitable bingo entertainment
center. As a public company, the Company benefits from operating in highly
regulated markets which levels the competitive playing field.
It is imperative that the Company continue to grow its operational revenues. The
Company has made a significant investment in assembling its management team and
operational infrastructure. This investment cost is now relatively fixed,
however, and the Company has the potential to significantly leverage its
profitability through incremental revenue increases. The Company will therefore
continue to employ an aggressive yet methodical growth strategy. It intends to
make strategic expansions in markets with: i) accommodating regulations; ii)
amenable charities; iii) favorable demographics (areas with concentrations of
middle-lower income earners and/or elderly population); and iv) significant
driving distance to competing gaming establishments. Once the Company has made
an expansion decision, the success of the venture is determined by: i) site
selection; ii) a continued favorable legal environment; iii) successful
operations management; and iv) customer acceptance and patronization.
The Company intends to grow through both acquisitions and developments. it uses
extensive review procedures to evaluate expansion opportunities, including
market studies, legal evaluations, financial analyzes and operational reviews.
The Company determines development budgets and acquisition prices based on the
proposed investment's expected financial performance, competitive market
position, risk profile and overall strategic fit within the Company's
operational plans. Acquisition terms typically include cash payments, issuance
of Company securities and seller-financed notes. Consulting and non-competition
agreements may also be included.
The Company expects to continue its expansion activities in those markets that
allow charity gaming activities. Some states currently allow video gaming in
charity centers, while other states are considering the legalization of charity
video gaming. Assuming continued government and charity funding shortages and
demonstrated customer interest, the Company believes that the number and types
of games that charities can offer in conjunction with bingo will continue to
increase. Management believes that video gaming such as bingo, blackjack, keno
and poker, as well as video pull-tab machines, has tremendous appeal to both
existing bingo clientele and potential new
Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 7
<PAGE>
customers, and would substantially increase charity fund-raising and expand the
overall market for charity gaming. The Company will remain actively involved in
the legislative process of bringing charity gaming to states where the Company
operates.
Other Products or Services and Their Markets
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1. Broadcast And Internet
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The Registrant has experience in the interactive communications and
entertainment fields which brings together elements of the "information
superhighway." It has created and broadcast interactive national television
programs using state-of-the-art computer technology, proprietary software
programs, satellite communications, and advanced telecommunications systems.
The Registrant's management believes that its experience in developing and
delivering interactive television programs, as well as its ownership of
proprietary systems and software, provide an advantage in its ability to launch
new entertainment and information programs based on comparable resources.
A. Globalot Bingo
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Introduction
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Globalot Bingo and Satellite Bingo are proprietary interactive Bingo games which
were broadcast by the Registrant in the past via satellite to participating
cable and television stations. The Registrant plans to resume expanded
broadcasts in the near future, when it repairs required telephone switching
equipment.
The use of telephones for game card distribution makes it possible for home
viewers to also participate in the Registrant's broadcast programs. The Globalot
Bingo program was designed to provide larger jackpots than participating
operations could individually pay, permitting participating cable and broadcast
stations to attract larger viewing audiences, increase profits and attract
commercial sponsors.
A broadcast took place on June 15, 1996; however, subsequent broadcasts have
been delayed by a problem with the Registrant's telephone switching equipment,
which should be resolved in the near future. Future plans include expanding the
game to other week nights. The game was broadcast over PandaAmerica Network in
the past and daily broadcasts resumed during the forth quarter of 1997. The
Registrant intends to broadcast a Million Dollar Globalot game each Saturday
evening at 11:00 p.m. (eastern time).
Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 8
<PAGE>
Operation
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In order to play the game each player must be playing a different card or cards.
Globalot Bingo has developed a "Super Jackpot Bingo" computer program that can
generate a series of one billion individual cards without duplication. Each card
is unique and all cards are serially numbered to preclude anyone from submitting
a fraudulent cards and/or counterfeiting.
Globalot Bingo cards may be obtained by telephone until a specified time. At
that point the Registrant provides the serial number of cards obtained for that
night's game to its central processing office.
In order to encourage participation and to develop a broad playing audience,
Globalot Bingo developed a special Million Dollar Globalot game, designed to air
each Saturday evening at 11:00 p.m. (eastern time). A broadcast took place on
June 15, 1996; however, subsequent broadcasts have been delayed by a problem
with the Registrant's telephone switching equipment, which should be resolved in
the near future.
When broadcasts resume, the game will pay the first person who attains Bingo
each broadcast night an advertised cash prize. The prizes will involve a chance
to win $1,000,000 by being the first participant to cover the correct 8 numbers
in 16 calls (the term call referring to the first 16 numbers selected in the
game) or less (the "Quick Pick 8" game) or, guaranteed second prizes of $25,000.
If there is no winner in the $1,000,000 game, the Registrant will pay the first
person to cover the shaded area or complete the Quick Pick 8 game $5,000. In
addition to the Quick Pick 8 game, the Registrant will award a $20,000.00 dollar
grand prize to the first person covering an entire card. Cards obtained to play
the Registrant's 24 hour program will be good for the entire week, including the
Saturday Million Dollar Globalot game.
As additional players participate, the Registrant plans to increase the grand
prize to $50,000.
When the televised game begins, each number being called on the televised show
is also recorded by the master computer. The computer system, by monitoring all
of the cards in play, is able to determine when a Bingo has occurred and provide
the location of the winning card holder. The viewing audience is immediately
shown the image of the winning card.
Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 9
<PAGE>
All games are called at the rate of approximately one Bingo number every 12-15
seconds in order to allow players to play multiple cards. If it is determined
that, based on the cards in play, the call is too fast or too slow, an
adjustment is made.
The national winner will be called during the broadcast by the program's host,
or, may call the Globalot Bingo 800 number shown on the program. Upon contact,
the winner will provide the Registrant's staff with his or her serial number and
other necessary identification, including name and address. The winner is then
instructed on how to claim the prize.
If for reasons beyond the control of Globalot Bingo the regular telecast and
game cannot be broadcast, all prize moneys announced for that week will be added
to the jackpot for the next succeeding game.
Technology
The Registrant will use proprietary technologies that enable viewers at home to
participate in Bingo games televised live in specific English speaking Hispanic
markets in the US and Worldwide (local laws permitting).
Globalot Bingo has a special telephone number, 800-729-BINGO (2464), which is an
access code to gain entry into long distance network. Upon dialing the number a
caller hears a 45 second message disclosing who the caller has reached,
providing information about Globalot Bingo, the caller's options and how to
receive Globalot Bingo playing cards by telephone (including the cost and method
of billing). A caller must have a prepaid calling card in order to obtain free
Globalot Bingo playing cards via the phone, which must be purchased from the
Registrant. The prepaid calling card also permits the purchaser to make long
distance telephone calls at savings of up to 70% from regular long distance
rates and will provide access to other services which the Registrant plans to
make available in the future.
In the event the caller, (who must be 18 or over), wishes to proceed after the
45 second announce ment he or she must activate the system. Upon activation by
the caller, the call is automatically switched to the Globalot Bingo card
distribution center, and charges for the call begin. The time necessary to
receive three Globalot Bingo playing cards by telephone is eight minutes and the
caller is charged $9.60 or $1.20 per minute. The charge for the call is deducted
from the caller's prepaid calling card. The prepaid calling card may be obtained
from the Tele-communications switch via credit cards or by sending in payment to
the Registrant.
Interactive players will also be able to obtain a strip of three cards free of
any charge by sending a stamped, self addressed envelope to the Registrant.
Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 10
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The Registrant has established a winners hot-line that will allow card holders
to obtain information concerning winning cards. This will allow players to play
and win even if they didn't have an opportunity to see the show. This number is
800-684-8493.
The Registrant also has the ability to receive long distance calls from 65
countries for Globalot Bingo playing cards, provided in the same manner as
domestic callers except that service is provided in the predominant language
used in the originating country. The cost for such calls will differ depending
on the country of origin. The Registrant receives a portion of each call paid,
payment being different in each originating country. International callers can
obtain play information over the Internet.
The Registrant's software and communications technology eliminates the need and
minimizes the expense related to the printing and distribution of Bingo cards by
permitting viewers to receive up to four "cards" (numbers) by phone; and, allows
its telephone switching network to handle thousands of calls simultaneously,
permitting optimum viewer participation in each game. The use of these
technologies also eliminates the need for live operators.
The Registrant's production offices and computer center are located at 1239
South Glendale Avenue, Glendale, California 91205. Its phone number is
1-800-460-2170. Each strip of three cards gives the holder nine chances to win
the Super Jackpot Prize.
Registrant's Income
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The Registrant's income will be based on the difference between the telephone
charges paid by players and the negotiated cost charged to by the participating
long distance company. The long distance charges will appear on each caller's
prepaid calling card, eliminating collection functions. Since no live operators
are employed in recording and processing the calls and awards, the only expenses
are related to the prizes offered, production and telecast of the Bingo game and
administrative costs.
Internet
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Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 11
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Competition
There are currently numerous entities engaged in the operation of commercial
bingo entertainment centers in the U. S. Commercial bingo center start-up
expenses are generally comprised of site selection and preparation, finish-out,
equipment and licensing fees, and typically cost from $100,000 to $250,000 per
center. Thus, there are no significant financial barriers to entry. However,
rigorous regulatory requirements and legal complexities of the involvement of
non-profit organizations serve to reduce the entry of new competitors. Since
bingo prize payout are often legally limited, competition, where it exists, is
normally focused on a center's amenities. Bingo centers with convenient
locations, attractive facilities, maximum bingo prize payout, ample parking,
attentive security, comfortable environment, friendly personnel and value-priced
concessions usually succeed in their market. The Company seeks to provide the
most desirable bingo center(s) in its respective markets in order to generate
long-term player loyalty. The Company is committed to ensuring that its bingo
centers remain appealing and that its customers are provided maximum comfort and
enjoyment. Additional competition within the bingo market comes from charitable
bingo operations owned and run by charities. In general, however, such
operations have not been able to compete with commercial operations due to,
according to most bingo players, smaller and less desirable facilities and
amenities, lower bingo prize payout and fewer bingo sessions.
Additional competition comes from other sectors of the gaming industry such as
lotteries, horse and dog racing and casino operations. While the Company is
cognizant of these competing operations, and does try to locate its facilities
in areas insulated from such competition, the Company believes that its patrons
represent unique, value-oriented customers for whom a day or night of bingo
represents a small investment of $10 - $100 that provides several hours of
entertainment with payout that rival the average slot machine. Lottery players
seek much larger payout with less time commitment, despite the infinitesimal
odds. Horse and dog racing bettors and casino patrons do enjoy comparable
entertainment value that bingo provides, but generally require longer commutes
to the gaming establishment as well as higher investments for the same period of
playing time. In addition, these other gaming venues do not provide the
socializing value that bingo provides. The Company also recognizes competition
from American Indian gaming establishments, which enjoy certain legal,
operational and tax advantages. The Company currently has no plans to compete in
American Indian gaming markets.
1. Broadcast
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Interactive Technology
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A number of important trends support management's belief that the Registrant is
re-entering the interactive television programming market at the right time with
the right products. As the
Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 12
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phenomenon known as the "Information Superhighway" continues to shape the way
people communicate with one another, receive information and facilitate
transactions, a number of events are beginning to occur.
Numerous books and recent articles indicate that people are becoming more
comfortable with services and entertainment offered in the privacy of their own
home through their telephones or personal computers. The data highway also known
as the National Information Infrastructure (NII), is helping facilitate this
trend by linking homes, offices and entertainment sources into one big network.
The data highway and its ability to reach millions of consumers is providing
unprecedented opportunities for manufacturers and marketers of products and
services. These companies are being challenged to find ways to use advanced
technology, like interactive technology, to make it easy for consumers to find
out about and purchase their products and services.
Popular examples of interactive technology in the consumer market include
on-line computer services (like Prodigy and CompuServe), voice automated
telephone services (like consumer banking and financial services), and at-home
television shopping services (like the Home Shopping Network). The success of
these have convinced management that interactive television programming like
that being offered will be well received by a public that continues to accept
more and more interactive technology into their daily lives.
The Bingo and Gaming Industry
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Management believes that the past success of the Registrant's interactive bingo
programs are evidence that the game is as popular as ever among people around
the world. Recent statistics generated by the United States government seem to
strongly support this belief. According to a recent survey of American Gambling
Attitudes and Behavior conducted by the United States Commission on the Review
of a National Policy Toward Gambling, bingo is the fourth leading "entertainment
sport" in the United States, generating some 60,000,000 spectators and/or
participants each month. This figure represents 7,300,000 more
participants/spectators than Major League Baseball attracts and almost
40,000,000 more participants/spectators than NFL Football and NBA Basketball
attracts.
The survey also shows that the game has equal appeal among genders.
Approximately 30% of bingo players have an income of $25,000 and over, and bingo
players are more likely to use their leisure time by doing indoor activities
such as reading books, newspapers and magazines.
Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 13
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As Americans become older as a population and choose to spend more time at home,
management believes that interactive television programs like those it plans to
offer will increase in popularity. Current statistics indicate that persons 65
and older that play Bingo play the game at least once a week.
These research findings and past experience support management's belief that
bingo is as popular as ever and that there is a viable market opportunity for
the Registrant's nationally and internationally interactive broadcast programs
The Registrant's Competitive Position
- -------------------------------------
The Registrant has no direct local competition for its current operations (the
operation of its facility in Piedmont, Alabama). However, its operations are in
competition with all aspects of the entertainment industry, both locally and
nationally.
Broadcast Bingo
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The Registrant competes with all broadcast game shows and, more generally, all
types of broadcast promotions designed to increase audience share and
advertising revenues. Management is not aware of any nationally broadcasted
bingo shows. Some locally-originated shows exist in various locations.
Management believes, without assurance, that it has a competitive edge over
other broadcast bingo promotions since Ron Foster originated the concept and has
been promoting it since 1984. Management believes that the Registrant has
established a reputation of equitable and complete service to the broadcast and
gaming industry.
With respect to game shows and other types of broadcast promotion, management
believes that the simplicity of the bingo game and its mass audience appeal
enables the Registrant to successfully compete with other game shows.
Other Activities
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The Registrant is not an established participant in the other areas in which it
expects to operate; however, management believes that the fields involve rapidly
developing markets which no single entity currently dominates, with great
opportunities for entry level participants possessing an understanding of
developing technologies. Consequently, although the interactive television
fields
Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 14
<PAGE>
are highly competitive and include major cable television and telephone
companies, management is confident that its endeavors constitute a niche in
which it can successfully compete.
2. Sources and Availability of Raw Materials and the Names of Principal
- --------------------------------------------------------------------------------
Suppliers
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None of the Registrant's proposed activities are reliant on raw materials.
Rather, they depend on the ability to exploit emerging technologies that are
expected to be readily available.
3. Dependence on One or a Few Major Customers
- ---------------------------------------------
The Registrant's current operations are highly reliant on two local charities.
Its former broadcast operations and contemplated future operations are not
expected to be reliant on any single or small group of customers.
Employees
- ---------
As of December 31, 1997, the Company had 12 permanent employees, including four
officers, three professional staff, three maintance and five kitchen staff. The
Company also retains the services of property managers who oversee the hall
maintance & grounds in Alabama. No employee of the Company is represented by a
labor union or is subject to a collective bargaining agreement.
Premises
Frontier Palace
458 Highway 278 Bypass - Piedmont, Alabama 36272 Company-owned
Government Regulation
Approximately 45 states and the District of Columbia have enacted laws
permitting and controlling the operation of bingo centers. A small but growing
number of these states also allow video gaming in charity sponsored centers. The
Company complies within this regulated structure as both landlord and
consultant/service provider to the charities. In most states the Company is
required to obtain and maintain permits and/or licenses from state and local
regulatory agencies. State regulations often limit the dollar amount that the
Company can charge a charity for rent per bingo session. Some states also limit
the number of weekly sessions that may be conducted in a given bingo center, as
well as the prize money that a charity may pay out per session.
Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 15
<PAGE>
The Company views this situation as a "double-edged sword," however, because the
regulatory limitations and complexities discourage new competitors that lack the
Company's experience and charity relationships. However, there can be no
assurance that current laws and regulations will not be changed or interpreted
in such a way as to require the Company to further restrict its activities or
rentals. It is also possible that liberalization of such regulations in certain
areas would diminish the Company's competitive advantage. In states that limit
the number of charity sessions, the Company recruits a sufficient number of
local charities to ensure that the maximum number of sessions are conducted.
All states providing for the operation of charity bingo centers have unique
regulations. While the vast majority of these states assign the regulation of
charity bingo to a state agency, in some states, regulation is under the control
of localities. The requirements typically imposed on a commercial bingo lessor
include the acquisition of necessary licenses and permits, a limit on the rental
payments to be made by a charity to the commercial lessor, and a prohibition
against the lessor directly operating a center. The Company is thus typically
prohibited from paying the wages of those employees operating the center as well
as any marketing or advertising expenses for the center. The regulations against
the direct operation and marketing of a bingo center by the Company reduce the
Company's payroll and advertising costs for the center. Since the Company is
allowed to act as a service provider, the Company can advise in the selection of
key employees and the creation and execution of a bingo center's operating plan.
Item 2 - Properties
- -------------------
The Registrant's principal offices were located in Piedmont, Alabama in
facilities purchased by the Registrant on December 16, 1994, for $6,500,000
(paid in shares of the Registrant's preferred stock, valued at $5.00 per share).
The facility is comprised of 80,000 square feet of usable space under roof, and
includes a Bingo hall. The Bingo hall, including the personal property owned by
the Registrant and maintained properties therein, has been leased on a month to
month basis by the Registrant to Piedmont Jaycees, Inc. since August 10, 1995.
The rental for the building and equipment located therein is $75,000 per month
or $7,000 per day, whichever is greater, plus all other defined expenses,
excluding insurance, ad valorem taxes, assessments, repairs, upkeep, maintenance
and similar expenses. However, the Piedmont Jaycees were not able to pay
$75,000.00 per month and the rent was reduce to a minium payment of $25,000.00
through the start period.
The Registrant also has a branch office at 1239 South Glendale Avenue, Glendale,
California, and Production Studio and transmission facilities are obtained from
third parties at competitive rates. The premises are comprised of approximately
3,000 square feet for which the Registrant pays $1,000
Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 16
<PAGE>
per month. The lease is scheduled to expire on December 31, 1997; however the
Registrant is confidant that the lease would be renewed on favorable terms.
Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements or
- --------------------------------------------------------------------------------
Labor Contracts, Including Duration
- -----------------------------------
The Registrant has no patent rights. It has the following service marks:
Satellite Bingo: International Class 41 (production and distribution of
television game shows) granted Registration Number 1,473,709
on January 19, 1988 to Satellite Bingo, Inc. 20 years.
Globalot Bingo: International Class 41 (production and distribution of
television game shows) applied for on September 24, 1993, by
SBI Communications, Inc.
Rico Bingo: International Class 41 (production and distribution of
television game shows) applied for on September 24, 1993, by
SBI Communications, Inc.
C-Note: International Class 41 (production and distribution of
television game shows) applied for on September 24, 1993, by
SBI Communications, Inc.
The Registrant obtained an assignment to a copyrights for "the Works," copyright
registrations for Globalot Bingo and derivatives: Number PAU 855-931 (June 10,
1986); Number PAu 847-876 (March 11, 1986); Number PAu 788-031 (September 19,
1985); Number PAu 927-410 (November 4, 1986); Number PA 370-721 (February 9,
1988); Number PA 516-494 (January 17, 1991); Number PA 533-697 (January 17,
1991); from Satellite Bingo, Inc., to SBI Communica tions, Inc., dated September
14, 1993.
Item 3 - Legal Proceedings
- --------------------------
Involvement in Certain Legal Proceedings
- ----------------------------------------
To the best knowledge and belief of the Registrant, during the past five years,
no present or former director, executive officer or person nominated as a
director or appointed as an executive officer of the Registrant or any of its
affiliated subsidiaries, has been involved in:
Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 17
<PAGE>
(1) Any bankruptcy petition by or against any business of which such
person was a general partner or executive either at the time of the
bankruptcy or within two years prior to that time;
(2) Any conviction in criminal proceeding or subject to a pending criminal
proceeding (excluding traffic violations and other minor offenses);
(3) Being subject to any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily, barring, suspending, or
otherwise limiting his involvement in any type of business, securities
or banking activities; and
(4) Being found by any court of competent jurisdiction (in a civil
action), the Commission or the Commodities Futures Trading Commission
to have violated a federal or state securities or commodities law, and
the judgment has not been reversed, suspended or vacated.
Item 4 - Submission of Matters to a Vote of Security Holders
- ------------------------------------------------------------
There were no matters submitted to a vote of security holders during the fourth
quarter of fiscal 1997. The Company's annual shareholder meeting with voting on
proxy issues is on April 28, 1998.
PART II
Item 5. Market Price of and Dividends on the Registrant's Common Equity and
- --------------------------------------------------------------------------------
Related Stockholder Matters
---------------------------
Preferred Stock
- ---------------
All attributes of the currently unissued preferred stock will be determined by
the Registrant's board of directors prior to issuance, as permitted by and
subject to the requirements of applicable Delaware law. The currently
outstanding preferred stock has a $5.00 per share par value and a $5.00 per
share liquidation preference; paying no dividend but convertible into common
stock upon demand at a
Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 18
<PAGE>
conversion rate equal to $5.00 per share divided by the market value of the
common stock at the date of conversion. The preferred stock has no voting rights
except as to matters specifically dealing with changes in the attributes of the
preferred stock.
Market for Common Equity
- ------------------------
The Registrant's stock is traded on the NASDAQ OTC Electronic Bulletin Board.
The Registrant currently has 5,345,439 shares of stock outstanding, with 950,000
in the public float. There are approximately 3,368 shareholders of record. For
the fiscal year ended December 31st, 1997 the Registrant reported revenues of
$544,662.00 and a net loss of $($4,723,202.00).
The Common Stock of Registrant has been traded over-the-counter since 1983. Its
trading symbol is "SBID." No established public trading market exists for the
Common Stock of Registrant at this time.
No common equity is subject to options or warrants to purchase or
securities convertible into common stock, except for the currently issued
168,000 shares of preferred stock which are convertible into common stock
1,500,000 were used to repurchase property in Piedmont, AL.
No common stock is currently being offered or proposed to be offered which
offering could be reasonably expected to have a materially adverse effect
on the market price of the Registrant's common equity; and There are
approximately 5,135,439 shares of common stock which will become eligible
for sale by December 31, 1997, pursuant to the provisions of Securities and
Exchange Commission Rule 144.
The Registrant has not agreed to register securities for resale under the
Securities Act of 1934, as amended, for anyone.
The following table sets forth in United States dollars the high and low bid
quotations for such shares. Such bid quotations reflect inter-dealer prices,
without retail mark-up, mark-down or commissions, and do not necessarily
represent actual transactions. The source of the following information is the
National Daily Quotation System, Inc.'s "Pink Sheets" and the National
Association of Securities Dealers, Inc.'s NASDAQ Electronic Bulletin Board.
Common Stock
------------
Date Low High
Fiscal 1996 $ 0.62 $1.37
-----------
Fiscal 1997
-----------
First Quarter $0.25 $0.50
Second Quarter $0.1875 $0.375
Third Quarter $0.125 $0.25
Fourth Quarter $0.1875 $0.375
------
Prices quoted reflect a one share for twenty reverse split effective on February
1, 1993.
Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 19
<PAGE>
Dividend Policy
- ---------------
The Registrant has never paid any dividends. it is the present intention of the
Registrant to pay dividends as soon as possible. There can, however, be no
assurance that funds for payment of dividends will ever be available, or that
even if available, the Registrant's board of directors then serving will resolve
to declare them.
Market
- ------
The Registrant's securities are currently quoted on the Nation Association of
Securities Dealers, Inc.'s NASDAQ Bulletin Board and on the National Daily
Quotation System, Inc.'s "Pink Sheets." The Registrant expects that its
securities will be listed on the National Association of Securities Dealers,
Inc.'s automated quotation system ("NASDAQ") within the next 12 months and that
they will be traded under its current symbol "SBID".
Section 15(g) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), requires brokers and dealers to make risk disclosures to customers before
effecting any transactions in "penny stocks". It also directs the Securities and
Exchange Commission to adopt rules setting forth additional standards for
disclosure of information concerning transactions in penny stocks.
Penny stocks are low-priced, over-the-counter securities that are prone to
manipulation because of their price and a lack of reliable market information
regarding them. Under Section 3(a)(51)(A) of the Exchange Act, any equity
security is considered to be a "penny stock," unless that security is: i)
registered and traded on a national securities exchange meeting specified
Securities and Exchange Commission criteria; ii) authorized for quotation on the
National Association of Securities Dealers, Inc.'s (NASD") automated
inter-dealer quotation system ("NASDAQ"); iii) issued by a registered investment
company; iv) excluded, on the basis of price or the issuer's net tangible
assets, from the definition of the term by Securities and exchange Commission
rule; or v) excluded from the definition by the Securities and Exchange
Commission.
Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 20
<PAGE>
Pursuant to Section 3(a)(51)(B), securities that normally would be considered
penny stocks because they are registered on an exchange or authorized for
quotation on NASDAQ may be designated as penny stocks by the Securities and
Exchange Commission if the securities are traded off the exchange or if
transactions in the securities are effected by market makers that are not
entering quotations in NASDAQ.
Rule 3a51-1 was adopted by the Securities and Exchange Commission for the
purpose of implementing the provisions of Section 3(a)(51). Like Section
3(a)(51), it defines penny stocks by what they are not. Thus, the rule excludes
from the definition of penny stock any equity security that is: (1) a "reported"
security; (2) issued by an investment company registered under the 1940 Act; (3)
a put or call option issued by the Options Clearing Corporation; (4) priced at
five dollars or more; (5) subject to last sale reporting; or (6) whose issuer
has assets above a specified amount. (Release No. 30608, Part III.A).
Rule 3a51-1(a) excludes from the definition of penny stock any equity security
that is a "reported security" as defined in Rule 11Aa3-1(a). A reported security
is any exchange-listed or NASDAQ security for which transaction reports are
required to be made on a real-time basis pursuant to an effective transaction
reporting plan. Securities listed on the New York Stock Exchange (the "NYSE"),
certain regional exchange-listed securities that meet NYSE or Amex criteria, and
NASDAQ National Market System ("NMS") securities are not considered penny
stocks. (Release No. 30608, Part III.A.1). Generally, securities listed on the
American Stock Exchange (the "Amex") pursuant to the Amex's original and junior
tier or its "Emerging Company Marketplace" listing criteria, are not considered
penny stocks. Securities listed on the Amex pursuant to its Emerging Companies
Market ("ECM") criteria, however, are considered to be "penny stock" solely for
purposes of Exchange Act 15(b)(6). (Release No. 30608, Part III.A.1).
Rule 3a51-1(d) excludes securities that are priced at five dollars or more.
Price, in most cases, will be the price at which a security is purchased or sold
in a particular transaction, excluding any broker commission, commission
equivalent, mark-up, or mark-down. In the absence of a particular transaction,
the five dollar price may be based on the inside bid quotation for the security
as displayed on a Qualifying Electronic Quotation System (i.e., an automated
inter-dealer quotation system as set forth in Exchange Act Section 17B(b)(2)).
"Inside bid quotation" is the highest bid quotation for the security displayed
by a market maker in the security on such a system. If there is no inside bid
quotation, the average of at least three inter-dealer bid quotations displayed
by three or more market makers in the security must meet the five dollar
requirement. Broker-dealers may not rely on quotations if they know that the
quotations have been entered for the purpose of circumventing the rule. (Release
No. 30608, Part III.A.3.b). An inter-dealer quotation system is defined in Rule
15c2-7(c)(1) as any system of general circulation to brokers and dealers that
regularly disseminates quotations of identified brokers or dealers. In the case
of a unit composed of one or more securities, the price divided by the number of
shares of the unit that are not warrants, options, or rights must be five
dollars or more.
Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 21
<PAGE>
Furthermore, the exercise price of any warrant, option, or right, or of the
conversion price of any convertible security, included in the unit must meet the
five dollar requirement. For example: a unit composed of five shares of common
stock and five warrants would satisfy the requirements of the rule only if the
unit price was twenty-five dollars or more, and the warrant exercise price was
five dollars or more. Once the components of the unit begin trading separately
on the secondary market, they must each be separately priced at five dollars or
more. (Release No. 30608, footnote 66).
Securities that are registered, or approved for registration upon notice of
issuance, on a national securities exchange are also excluded from the
definition of penny stock (Rule 3a51-1(e)). The exchange must make transaction
reports available pursuant to Rule 11Aa3-1 for the exclusion to work. The
exclusion is further conditioned on the current price and volume information
with respect to transactions in that security being reported on a current and
continuing basis and made available to vendors of market information. In
addition, the exclusion is limited to exchange-listed securities that actually
are purchased or sold through the facilities of the exchange, or as part of a
distribution. Exchange-listed securities satisfying Rule 3a51-1(e), but which
are not otherwise excluded under Rule 3a51-1(a)-(d), continue to be deemed penny
stocks for purposes of Exchange Action Section 15(b)(6).
Exchanges that qualified for this exclusion as of April, 1992 were the NYSE,
Amex, Boston Stock Exchange, Cincinnati Stock Exchange, Midwest Stock Exchange,
Pacific Stock exchange, Philadelphia Stock Exchange, and the Chicago Board of
Options. (Release No. 30608, footnote 37).
Securities that are registered, or approved for registration upon notice of
issuance, on NASDAQ are excluded from the definition of penny stock (Rule
3a51-1(f)). Similar to the exchange-registered exclusion of Rule 3a51-1(e), the
NASDAQ exclusion is conditioned on the current price and volume information with
respect to transactions in that security being reported on a current and
continuing basis and made available to vendors of market information pursuant to
the rules of NASD. NASDAQ securities satisfying Rule 3a51-1(e), but which are
not otherwise excluded under Rule 3a51-1(a)-(d), continue to be deemed penny
stocks for purposes of Exchange Act Section 15(b)(6).
An exclusion is available for the securities of issuers that meet certain
financial standards. This exclusion pertains to: (1) issuers that have been in
continuous operation for at least three years having net tangible assets in
excess of $2 million (Rule 3a51-1(g)(1); ii) issuers that have been in
continuous operation for less than three years having net tangible assets in
excess of $5 million (Rule3a51-1(g)(1); iii) issuers that have an average
revenue of at least $6 million for the last three years (Rule 3a51- 1(g)(2)). To
satisfy this requirement, an issuer must have had total revenues of $18 million
by the end of a three-year period. (Release No. 30608, Part III.A.4). The
Registrant believes that its securities qualify under this exemption.
Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 22
<PAGE>
For domestic issuers, net tangible assets or revenues must be demonstrated by
financial statements that are dated no less than fifteen months prior to the
date of the related transaction. The statements must have been audited and
reported on by an independent accountant in accordance with Regulation S-X. For
foreign private issuers, net tangible assets or revenues must be demonstrated by
financial statements that are dated no less than fifteen months prior to the
date of the related transaction. The statements must be filed with the
Securities and Exchange Commission pursuant to Rule 12g3-2(b). If the issuer has
not been required to furnish financial statements during the previous fifteen
months, the statements may be prepared and audited in compliance with generally
accepted accounting principles of the country of incorporation.
Whether the issuer is domestic or foreign, in all cases a broker or dealer must
review the financial statements and have a reasonable basis for believing that
they were accurate as of the date they were made (Rule 3a51-1(g)(3). In most
cases a broker-dealer need not inquire about or independently verify information
contained in the statements. (Release No. 30608, Part III.A.4). Brokers and
dealers must keep copies of the domestic or foreign issuer's financial
statements for at least three years following the date of the related
transaction (Rule 3a51-1(g)(4).
Security Holders
- ----------------
As of December 31, 1997, the latest practicable date for which information is
available, the Registrant's management was of the opinion that the Registrant
had approximately 3,368 common stock holders.
Dividends
- ---------
There have been no cash dividends declared or paid since the inception of the
Registrant and no dividends are contemplated to be paid in the foreseeable
future.
Description of Securities
- -------------------------
General
- -------
The Registrant is authorized to issue 50,000,000 shares of capital stock,
40,000,000 shares of which are designated as common stock, $.001 par value per
share, and the balance as preferred stock, $5.00 par value per share.
As of December 31, 1997, 5,345,439 shares of Common Stock were outstanding
(excluding the 2,500,000 shares held but not yet allocated by the Registrant's
Employees' Trust) and held of record by approximately 3,368 persons. In
addition, 1,668,000 shares of preferred stock were outstanding, and held by
approximately five persons.
Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 23
<PAGE>
Corporate Stock Transfer, 370 17th Street, Suite 2350; Denver Colorado 80202,
acts as transfer agent and registrar for the Registrant's common and preferred
stock.
Item 6. Management's Discussion and Analysis of Financial Condition and Results
- --------------------------------------------------------------------------------
of Operations and Plan of Operation.
------------------------------------
Introduction
- ------------
The Registrant is currently in the development stage of its business cycle.
Since its inception, the Registrant has actively pursued licensing agreements
designed to generate royalty income in exchange for providing software and
methods involving bingo game production. In the past, the registrant has entered
into various agreements covering territories in Brazil, Greece, Hong King, and
Indian reservations, military bases, and charity bingo parlors in the United
States. Prior emphasis on these type of licensing agreements has proven to be
ineffective. No licensee currently has bingo operations generating significant
fees or royalties for the Registrant. The majority of its current operating
income is provided by rental income generated from the lease of its bingo
facility to non-profit charities in a facility owned by the Registrant. The
majority of future revenues, however, are not anticipated to occur in either of
these areas. The Registrant hopes to generate significant future revenues from
telecommunications services involved in interactive bingo and television buying
shows by purchasing large blocks of long distance telephone time and reselling
such time to television audience users at a profit. Management of the Registrant
has made this area of business their first priority, and most of the other plans
for the future are based on the success of the telecommunications area.
Management would like to broadcast the bingo show to as many viewers as
possible, and although there are no current foreign agreements, management's
plans are not limited to the U.S. Management intends to pursue contracts with
foreign countries and do some research into bingo on the Internet. Overall,
management hopes to be able to generate k/net revenues over $10 million annually
from this area of business. The registrant also has plans to expand operations
through the acquisition of television production facilities and rights to a
television buying show. This would allow the Registrant to produce their bingo
show in their own studio and broadcast it over their own network. It will also
give management freedom to use their experience in programming and production to
produce other forms of interactive entertainment, such as the ideas of Public
Domain Broadcasting and The Life and Leisure Network mentioned elsewhere in this
offering document. Diligently being examined are the legal opinions submitted
for imminent contractual arrangements between two companies with the Registrant,
a major international shop at home entity and a telecommunications company. Both
of these entities are NASDAQ listed. Management feels confident that a deal will
be consummated by year end 1996 allowing the Registrant to commence operations
on a full scale in the telecommunications business segment.
Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 24
<PAGE>
The Registrant is continuing to search for avenues to develop future revenue. In
light of the preliminary and conditional nature of negotiations, no assurance
can be provided as to the likelihood that such proposed projects will come to
fruition. A summary of projects currently being pursued is as follows:
Liquidity
- ---------
The following table summarizes working capital and total assets:
Fiscal Year Ended December 31,
1997 1996
---- ----
Working Capital $ 118,160 $ 290,023
Total Assets $2,955,234 $7,441,024
December 31, 1995, the Registrant's current assets exceeded its current
liabilities, creating a working capital surplus. The surplus is primarily the
result of the issuance of preferred convertible stock to liquidate liabilities
owed to shareholders, and in income provided by the Registrant's operating
activities relating to approximately $100,000 in fees collected from charities
that sponsor bingo games at the Registrant's bingo hall.
At December 31, 1994, the Registrant had current liabilities in excess of
current assets, principally due to administrative expenses incurred during the
development stage that have been funded by the majority stockholder in the form
of advances due on demand. The Registrant has had some success in issuing stock
for services, and accordingly has kept the working capital deficit to a minimum
during these years.
The changes in total assets are attributable to the Registrant's purchase of a
building (bingo hall) in 1994 through the issuance of preferred stock. As a
result, income from bingo hall operations has boosted working capital in the
calendar year ended December 31, 1997. In the years prior to 1996, the
Registrant was primarily involved in securing licensing agreements for rights to
software and methods of operating bingo games it had developed.
As the Registrant continues to operate in the development stage, no significant
cash flow is being generated from operating activities. 1997 was a relatively
dormant year. The registrant was able to generate $12,000 in cash flow from
operations principally from management/services of the bingo hall in the year
ended 1997. Shareholders also advanced net funds of $51,564 in 1996 and was
repaid in the year ended 1997, allowing the registrant to generate positive
total cash flow of $56,607 for the year. In 1996, the Registrant became more
active in pursuing ventures, as well as managing the bingo hall for the entire
year. For 1995, the charities operating the bingo hall struggled, and the
Registrant collected less funds than were needed to operate the games, as well
as to cover administrative costs and
Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 25
<PAGE>
costs of the facility. As a result, the Registrant used $350,199 in net cash
flow for operations. The registrant also acquired various operating equipment at
a cost of $105,363. To fund these cash flow needs, the Registrant was able to
obtain $250,000 in proceeds from a loan to an affiliate, and $165,000 in
proceeds from the sale of common stock. Combined, this resulted in a net
decrease in cash for the year of $47,339.
Capital Resources
- -----------------
Since its inception, the Registrant's only significant sources of capital have
been from the sale of common stock and loans from shareholders. See a discussion
of these transactions under Item 7 Certain Relationships and Related Party
Transactions, and in the Consolidated Financial Statements of the Registrant.
The Registrant has also acquired significant assets through the sale of
convertible preferred stock. The Registrant anticipates continued expansion of
its business through acquisitions using Company stock. Furthermore, with the
bingo hall acquired in 1994 now in operation, the Registrant anticipates
generation of revenues from the lease of this facility sufficient to cover
administrative costs still being incurred as the Registrant moves forward in its
development stage.
Results of Operations
- ---------------------
The following table sets forth the relative relationship to total revenue of the
revenue categories in the Registrant's statement of income and percentage
changes (rounded to the nearest whole dollar).
Amount of Total Revenue
Fiscal Year Ended December 31, 1997 1996
---- ----
Revenues:
Licenses & Royalties -0- -0-
Bingo Hall Operations $411,033 $352,000
Kitchen and gift shop revenues 131,703 67,019
Other Income 1,926 2,109
-------- --------
Total Revenue $544,662 $421,128
======== ========
In general, the Registrant experienced insignificant revenues in 1997 as it
attempted to expand and develop its operations. Total revenues were $544,662 for
1997. The Registrant owns a bingo hall, during 1997 was leases to charities who
sponsor bingo games. The Registrant also provides management services to assist
the charities in the operations of the bingo games, for which the Registrant
charges a fee. Net revenues related to the bingo hall operations were only
$352,000 in
Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 26
<PAGE>
1996, but have grown to $411,033 for the calendar year ended December 31, 1997.
Total revenues for calendar year ended December 31, 1997 were $544,662.
Accordingly, except for the operation of the bingo hall, there are no other
significant revenue sources of the Registrant at this time. For 1996 and 1997,
the Registrant did not generated revenue from the sale of copyrighted bingo
cards, foreign licensing agreements, sale of computer hardware or security
systems, or other various areas of business opportunity discussed in this
offering document.
The Registrant's expenses can be summarized as follows:
Amount of Total Expenses
Fiscal Year Ended December 31, 1997 1996
---- ----
Salaries and related expenses $157,649 $170,822
Other general and administrative expenses $358,670 $488,545
Depreciation and amortization $346,742 $544,752
Interest expenses and finance charges $ 82,637 $ 76,202
The most significant expense relates to the amortization of trademark, game show
and computer program assets the Registrant has developed. The expense is running
$ 265,960 per year. Such assets will be fully amortized at the end of 1997. For
1997, the Registrant also had depreciation on the bingo hall and related
equipment, which will approximate $367,202 per year. These expenses do not
require the use of cash. The low level of other expenses in 1994 is due to a
slow down in the general activity of the Registrant as it explored alternative
revenue generating ideas. With the addition of the bingo hall in late 1994, as
well as the pursuit of television production and broadcast possibilities in
1996, such expenses have decreased in 1997. As the Registrant continues to
pursue television production and broadcast possibilities, these expenses will
continue to rise as a result of expanded facility space and travel costs.
Interest and finance charge expenses increased in 1996 due to $200,000 in
finance charges incurred to obtain short-term financing. These finance charges
were paid for through the issuance of preferred stock.
Should the Registrant successfully acquire production facilities and broadcast
companies under consideration, or expand operations in areas previously
discussed as currently under consideration, revenues and expenses of the
Registrant would change significantly. Management is not able to predict the
impact of such changes on revenues or expenses at this time.
Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 27
<PAGE>
Statement Re Computation of Earnings Per Share
- ----------------------------------------------
See Notes To Consolidated Financial Statements included elsewhere in this filing
for a description of the Registrant's calculation of earnings per share.
Item 7. Financial Statement and Summary Financial Data
- ------------------------------------------------------
Financial Statements
- --------------------
The unaudited consolidated balance sheet of the Registrant for its years ended
December 31, 1997 and 1996 and the related consolidated statements of
operations, stockholder's equity and cash flows are submitted herewith.
Index to Financial Statements
- -----------------------------
The audited consolidated balance sheet of the Registrant for its years ended
December 31, 1997 and 1996 and related consolidated statements of income (loss),
stockholder's equity and cash flows therefor, follow. The page numbers for the
financial statement categories are as follows:
Page Description
- ---- -----------
__ Report of Certified Public Accountants, as to the calendar years ended
December 31, 1997 and 1996.
__ Consolidated Balance Sheets - December 31, 1997 and December 31, 1996.
__ Consolidated Statement of Income (Loss) for the calendar years ended
December 31, 1997 and December 31, 1996 and from inception until December
31, 1997.
__ Consolidated Statement of Changes in Stockholder's Equity from Inception
(January 10, 1986) through December 31, 1997.
__ Consolidated Cash Flows for the calendar years ended December 31, 1995 and
December 31, 1995 and from inception until December 31, 1997.
__ Notes to Consolidated Financial Statement Statements for the calendar years
ended December 31, 1997 and December 31, 1996.
SBI COMMUNICATIONS, INC.
------------------------
AND SUBSIDIARY
--------------
CONSOLIDATED FINANCIAL STATEMENTS
---------------------------------
DECEMBER 31, 1997 AND 1996
--------------------------
Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 28
<PAGE>
SBI COMMUNICATIONS, INC. AND SUBSIDIARY
---------------------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
DECEMBER 31,
------------
<TABLE>
<CAPTION>
1997 1996
---- ----
ASSETS
------
Current assets:
<S> <C> <C>
Cash $ 22,228 $ 42,327
Accounts receivable, net of allowance for doubtful
accounts of $-0- at December 31, 1997 and 1996 (Note 8) 250 120,306
Accounts and notes receivable from affiliates (Note 2) 9,617 3,600
Inventories 86,065 24,391
----------- -----------
118,160 190,624
Property and equipment, net of accumulated
depreciation (Note 3) 2,752,900 7,026,112
Other assets:
Accounts receivable - long-term, doubtful
accounts of at December 31, 1996 -- 100,000
Organization costs, trademarks, shows, computer
programs and game inventory, net (Note 4) -- --
Deferred loan costs 21,109 56,200
Deposits 63,065 68,088
----------- -----------
$ 2,955,234 $ 7,441,024
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Note payable to trust managed by a shareholder (Note 2) $ 150,000 $ 200,000
Mortgage note payable-current portion (Note 5) 239,701 5,873
Capitalized leases-current portion (Note 5) 17,491 --
Accrued wages due to principal shareholder (Note 2) 290,000 180,000
Advances due to principal shareholder (Note 2) -- 14,901
Account payable and accrued expenses 150,442 83,873
----------- -----------
847,634 484,647
Mortgage payable, long-term portion (Note 5) -- 240,229
Capitalized leases, long-term portion (Note 5) 62,216 --
Other notes payable (Note 5) 52,438 --
----------- -----------
Total liabilities 962,288 724,876
----------- -----------
Stockholders' equity (Note 6):
Preferred stock, par value $5.00; 10,000,000
shares authorized; 1,673,000 and 1,693,000
shares issued and outstanding at
December 31, 1997 and 1996, respectively 8,365,000 8,465,000
Common stock, par value $.001; 40,000,000 shares authorized;
5,345,439 shares issued and outstanding at December 31,
1997 and 1996 5,345 5,345
Paid in capital 3,567,343 3,467,343
Accumulated deficit (9,944,742) (5,221,540)
----------- -----------
1,992,946 6,716,148
----------- -----------
$ 2,955,234 $ 7,441,024
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 29
<PAGE>
SBI COMMUNICATIONS, INC. AND SUBSIDIARY
---------------------------------------
CONSOLIDATED STATEMENTS OF LOSS
-------------------------------
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
<TABLE>
<CAPTION>
1997 1996
---- ----
Revenues (Note 8):
<S> <C> <C>
Bingo hall rent $ 411,033 $ 352,000
Kitchen and gift shop revenues 131,703 67,019
Administrative fees -- --
Other income 1,926 2,109
----------- -----------
544,662 421,128
----------- -----------
Expenses:
Cost of sales - kitchen and gift shop 180,563 37,892
Salaries and related expenses 157,649 170,822
Facility costs 49,518 80,605
General and administrative 358,670 488,545
Travel and production costs 102,762 72,029
Depreciation and amortization 306,742 544,752
Interest and finance expenses 82,637 76,202
----------- -----------
1,238,541 1,470,847
----------- -----------
Net loss from operations (693,879) (1,049,719)
Loss arising from impairment in value of long-lived
assets - write-down of land and building to estimated
realizable value (Note 8) (4,029,323) --
----------- -----------
Net loss ($4,723,202) ($1,049,719)
=========== ===========
Net loss per share (Note 7) ($ 0.88) ($ 0.20)
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 30
<PAGE>
SBI COMMUNICATIONS, INC. AND SUBSIDIARY
---------------------------------------
CONSOLIDATED STATEMENTS OF CHANGES IN
-------------------------------------
SHAREHOLDERS' EQUITY
--------------------
FOR THE YEARS ENDING DECEMBER 31, 1996 AND 1997
-----------------------------------------------
<TABLE>
<CAPTION>
Common Stock Preferred Stock Additional Total
Number Number Paid-in Accumulated Shareholders'
of shares Amount of shares Amount Capital Deficit Equity
--------- ------ ---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance December 31, 1995 5,345,439 5,345 1,668,000 8,340,000 3,572,343 (4,171,821) 7,745,867
Preferred stock
issued in July, 1996
to cover $20,000 in
loan closing costs,
20,000 shares to be
returned in 1997 -- -- 25,000 125,000 (105,000) -- 20,000
Net loss, January 1, 1996
to December 31, 1996 -- -- -- -- -- (1,049,719) (1,049,719)
--------- ------ ---------- ----------- ----------- ----------- -----------
Balance December 31, 1996 5,345,439 5,345 1,693,000 8,465,000 3,467,343 (5,221,540) 6,716,148
Excess preferred stock
issued in July, 1996
to cover $20,000 in
loan closing costs,
20,000 shares were
returned in 1997 -- -- (20,000) (100,000) 100,000 -- --
Net loss, January 1, 1997
to December 31, 1997 -- -- -- -- -- (4,723,202) (4,723,202)
--------- ------ ---------- ----------- ----------- ----------- -----------
Balance December 31, 1997 5,345,439 $5,345 1,673,000 $ 8,365,000 $ 3,567,343 ($9,944,742) $ 1,992,946
========= ====== ========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 31
<PAGE>
SBI COMMUNICATIONS, INC. AND SUBSIDIARY
---------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
FOR THE YEAR ENDED DECEMBER 31,
-------------------------------
<TABLE>
<CAPTION>
1997 1996
---- ----
Cash flows from operating activities:
<S> <C> <C>
Net (loss) ($4,723,202) ($1,049,719)
Adjustments to reconcile net loss to cash
provided (used) by operating activities:
Loss arising from write-down of land and
building to estimated realizable value 4,029,323 --
Depreciation and amortization 341,833 569,552
Services paid through reduction in amounts
receivable from affiliates -- 25,000
Change in accounts receivable, trade 128,234 279,558
Change in inventories 8,148 36,297
Change in accounts payable and accrued expenses 176,569 84,406
----------- -----------
Cash (used) by operating activities (39,095) (54,906)
----------- -----------
Cash flows from investing activities:
Purchase of property and equipment (40,853) (51,603)
Decrease (increase) in deposits 5,023 (5,000)
Loans to affiliates (6,017) (3,600)
----------- -----------
Cash (used) by investing activities (41,847) (60,203)
----------- -----------
Cash flows from financing activities:
Loans received from (repaid to) affiliates -- 10,745
Repayments of affiliated loans (14,901) (50,000)
Borrowings on new loans and capital leases 145,000 250,000
Repayments on loans and capital leases (69,256) (3,898)
Deferred loan costs paid -- (61,000)
Proceeds from issuance of common stock -- --
----------- -----------
Cash flows provided by financing activities 60,843 145,847
----------- -----------
Net increase (decrease) in cash (20,009) 30,738
Cash at beginning of year 42,327 11,589
----------- -----------
Cash at end of year $ 22,228 $ 42,327
=========== ===========
Supplemental information:
Income taxes paid $ -- $ --
=========== ===========
Interest paid $ 41,144 $ 50,241
=========== ===========
</TABLE>
Non-cash activities:
- --------------------
During 1996, $25,000 in services were paid for through the reduction of $25,000
in affiliated loans receivable, and $20,000 in loan closing costs were paid for
through the issuance of 20,000 shares of preferred stock. During 1997, $100,000
in trade receivables were settled for receipt of inventory valued at $69,822 and
furniture valued at $22,000.
See accompanying notes to consolidated financial statements.
Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 32
<PAGE>
SBI COMMUNICATIONS, INC. AND SUBSIDIARY
---------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
DECEMBER 31, 1997 AND 1996
--------------------------
Note 1 - Summary of significant accounting policies
- ---------------------------------------------------
The major accounting policies of SBI Communications, Inc. are summarized below
to assist the reader in reviewing the Company's financial statements.
Organization and operations
- ---------------------------
SBI Communications, Inc. (the "Company"), was originally organized in the State
of Utah on September 23, 1983, under the corporate name of Alpine Survival
Products, Inc. Its name was subsequently changed to Justin Land and Development,
Inc. during October, 1984, and then to Supermin, Inc. on November 20, 1985. On
September 29, 1986, Satellite Bingo, Inc. was the surviving corporate entity in
a statutory merger with Supermin, Inc., a Utah corporation. In connection with
the above merger, the former shareholders of Satellite Bingo, Inc. acquired
control of the merged entity and changed the corporate name to Satellite Bingo,
Inc. Through shareholder approval dated March 10, 1988, the name was changed to
its current name of SBI Communications, Inc. On January 1, 1993, the Company
executed a plan of merger that effectively changed the Company's state of
domicile from Utah to Delaware. Although the Company is currently a Delaware
corporation, on January 31, 1997, the stockholders and Board of Directors
approved a plan to change the Company's corporate domicile to the State of
Nevada. Management anticipates executing the plan during 1998.
The Company plans to lease or operate bingo halls and to provide interactive
satellite cable bingo game shows and other similar telecommunication gaming
products or services to television viewers throughout the United States. During
1997, the Company's only operations were the leasing of a bingo hall located in
Piedmont, Alabama, and the operation of the kitchen facilities therein. Under
Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 33
<PAGE>
local ordinances, the hall must be leased to a charity, which was the local
Jaycees. As described in Note 8, the Company is being forced to sell its
facility a cease bingo operations in Piedmont, Alabama. The Company plans to
continue to search for avenues to provide bingo over the Internet, as well as to
explore other revenue producing ventures.
Principles of consolidation
- ---------------------------
The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiary, SBI Communications, Inc. (an Alabama corporation).
Intercompany transactions and balances have been eliminated in consolidation.
Estimates and assumptions
- -------------------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reporting amount of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Property and equipment
- ----------------------
Property and equipment are stated at cost. Expenditures for maintenance and
repairs which do not improve or extend the life of an asset are charged to
expense as incurred. Major renewals and betterments are charged to the property
accounts. Upon retirement or sale of an asset, its cost and related accumulated
depreciation or amortization are removed from the property accounts, and any
gain or loss is recorded as income or expense. Depreciation is provided using
straight-line methods for financial reporting.
Trademarks, shows and computer programs
- ---------------------------------------
Trademarks, shows and computer programs are intangible assets acquired through
the issuance of stock. Such assets are being amortized on a straight-line basis
over sixty (60) months. The five-year life is a subjective estimate that was
derived after considering such factors as consumer demand, competition, expected
actions of competitors, effect of obsolescence, etc.
Deferred loan costs
- -------------------
Deferred loan costs represent costs incurred to obtain existing debt, and are
being amortized over the life of the related loan using the interest method.
Income taxes
- ------------
Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 34
<PAGE>
The Company provides for income taxes in accordance with Statement of Financial
Accounting Standards No. 109, which requires the use of the asset and liability
method and recognizes deferred income taxes for the consequences of "temporary
differences" by applying enacted statutory tax rates applicable to future years
to differences between the financial statement carrying amounts and the tax
bases of existing assets and liabilities. The Company's "temporary differences"
relate to accrued compensation to shareholders which is a deduction in the year
paid, and differences in book versus tax depreciation methods. Deferred tax
assets also may be recorded for the future benefits of operating loss carry
forwards if such benefits are not deemed "more likely than not" to be realized.
The effect on deferred taxes for a change in tax rates is recognized in income
or expense in the period that includes the enactment date.
Rental and administrative fee income
- ------------------------------------
The Company managed for various charities a bingo hall in Piedmont, Alabama.
Rents and administrative fees charged to charities are unsecured, and generally
are paid only as revenues from the bingo games produce sufficient profit to
allow the charities to make payments. The lease in effect during 1997 required
minimum rent of $25,000 per month, with additional contingent rent of $50,000
per month depending upon the success of the bingo games. Management records
contingent rent revenue and administrative fee income only as it is collected.
Statements of cash flows
- ------------------------
For the purposes of the statements of cash flows, the Company considers cash and
highly liquid investments purchased with a remaining maturity of three months or
less at the date of purchase to be cash equivalents.
Note 2 - Related party transactions
- -----------------------------------
From time to time, the Company's principal shareholder advances money to the
Company for operations. All amounts owed to the shareholder are non-interest
bearing advances. As of December 31, 1995, the Company owed $4,156 to this
shareholder. During 1996, the Company borrowed (on a net basis) an additional
$10,745 from this shareholder. During 1997, the Company repaid all amounts
advanced, plus further advanced to the shareholder $9,617. The Company owed this
shareholder $14, 901 at December 31, 1996, and had $9,617 receivable from this
shareholder at December 31, 1997. In addition to advances, the Company accrued
salaries payable to the Company's principal shareholder totaling $110,000 and
$120,000 for the years ended December 31, 1997 and 1996, respectively. All
amounts owed to the shareholder are payable on demand.
In October, 1995, the Company borrowed $250,000 from a trust managed by a
shareholder, in the form of a mortgage note. The note was payable in full on
October 15, 1996, with interest payable quarterly at prime plus 3%, secured by
all corporate property up to $1,000,000 in value. $50,000 of this note was
repaid in 1996 when due, and an additional $50,000 was repaid during 1997. The
holder had the right to convert the mortgage note to common stock at a price of
$3 per share. This conversion privilege expired on July 15, 1996. The note has
been extended on a quarter to quarter basis, with
Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 35
<PAGE>
$150,000 remaining outstanding at December 31, 1997. Interest expense related to
this note totaled approximately $20,000 and $27,000 for the years ended December
31, 1997 and 1996, respectively.
In October, 1995, the Company advanced $25,000 to a shareholder to be repaid
upon demand with interest at prevailing market rates. This shareholder also
provides services to the Company relating to acquisition candidates and capital
sources. The above note was applied as payment for such services in 1996. An
additional $11, 700 was paid to this shareholder during 1996 for the services
described.
In 1996, the Company loaned $3,600 to a relative of a shareholder. This loan is
non-interest bearing and is due upon demand.
Note 3 - Property and equipment
Property and equipment are summarized as follows at December 31:
Estimated
Useful Life 1997 1996
----------- ---- ----
Land (see Note 8) $ 250,000 $ 250,000
Building (see Note 8) 1,750,000 6,250,000
Vehicles 5 years 10,920 10,920
Furniture and equipment 5 to 7 years 1,109,182 1,024,296
---------- ----------
3,120,102 7,535,216
Less accumulated
depreciation 367,202 282,085
---------- ----------
$2,752,900 $7,253,131
Depreciation expense totaled approximately $306,000 and $279,000 for the years
ended December 31, 1997 and 1996, respectively.
Note 4 - Organization costs, trademarks, and similar assets
- -----------------------------------------------------------
Organization costs, trademarks, shows, computer programs and game inventory
represent assets acquired or developed in prior years as the Company went
through its development stage, and are summarized as follows at December 31:
1997 1996
---- ----
Trademarks:
Original cost $500,000 $500,000
Less accumulated amortization 500,000 500,000
-------- --------
$ -- $ --
======== ========
Shows and computer programs:
Original cost $829,800 $829,800
Less accumulated amortization 829,800 829,800
-------- --------
$ -- $ --
======== ========
Game inventory:
Original cost $ 75,400 $ 75,400
Less amounts used in operations 75,400 75,400
-------- --------
$ -- $ --
======== ========
Organization costs:
Original cost $ 758 $ 758
Less accumulated amortization 758 758
-------- --------
$ -- $ --
======== ========
Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 36
<PAGE>
Game inventory was expensed as used. All other assets listed above were
amortized over sixty (60) months. Amortization expense on the above intangible
assets totaled approximately $266,000 for the year ended December 31, 1996.
Note 5 - Mortgage note payable
- ------------------------------
On April 1, 1996, the Company borrowed $250,000 from a mortgage company. The
note is payable in thirty (30) equal monthly installments of $3,330 including
interest at fourteen percent (14%) per annum, with a final balloon payment of
any remaining unpaid principal due October 1, 1998, secured by a deed of trust
on the Company's real estate. The balance on this note was $239,701 at December
31, 1997. Due to events as described at Note 8, the entire balance of the note
has been classified as current. The note includes pre-payment penalties ranging
from 4% to 6% depending upon the timing of the prepayment.
In connection with the above note, the lending company was granted options to
purchase 250,000 shares of common stock for $0.50 per share. These options
expire upon repayment of the loan. In addition, the Company agreed to issue
5,000 shares of preferred stock to the lender to cover $20,000 in loan closing
costs. Upon issuance, the Company inadvertently issued 25,000 shares instead of
$25,000 in value of preferred stock to the lender. Such shares were outstanding
at December 31, 1996. In March, 1997, the lender returned the certificate for
the 25,000 shares to the Company, and a new certificate for 5,000 shares will be
issued. The Company has recorded all 25,000 shares as outstanding at December
31, 1996, and reduced paid-in capital for the value of the extra 20,000 shares.
The adjustment to paid-in capital has been reversed in 1997 with the issuing of
the new certificate.
Note 6 - Common and preferred stock activity
- --------------------------------------------
The Delaware corporation is authorized to issue up to 40,000,000 shares of
common stock with a par value of $.001 per share, and 10,000,000 shares of
preferred stock with a par value of $5.00 per share. The preferred stock may be
issued from time to time in one or more series, the shares of each series to
have such voting powers, dividend rates, designations, preferences, and other
characteristics as adopted
Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 37
<PAGE>
by the Board of Directors. Preferred stock issued to date consists of one series
(Series A), having a liquidation preference of $5.00 per share, paying no
dividend, and convertible into common stock upon demand, at a conversion rate
that would transfer shares of common stock worth an amount equal to the par
value of the preferred stock based upon the market value of the common stock at
the date of conversion.
Over the history of the Company, there have been a number of non-cash
transactions involving the issuance of common stock of the Company (with related
as well as unrelated parties) recorded based on the estimated fair value of the
consideration received (the asset received or debt retired) regardless of the
number of common shares issued in such transactions in that it is the opinion of
management that the Company's common stock did not have a readily determinable
market value at the time of the transactions.
The Board of Directors have approved fourteen (14) classes of preferred stock in
total. No shares have been issued relating to any Series other than Series A as
described above. Series A through G of preferred stock have a liquidation
preference of $5.00 per share, pay no dividends, and are convertible to common
stock upon demand at the following conversion rates:
Series A Sufficient number of shares of common stock worth an amount
equal to the par value of the preferred stock based upon the
market value of the common stock at the date of conversion.
Series B 5 shares common for 1 share preferred
Series C 1 share common for 1 share preferred
Series D 2 shares common for 1 share preferred
Series E 3 shares common for 1 share preferred
Series F 4 shares common for 1 share preferred
Series G 10 shares common for 1 share preferred
Series H through N of preferred stock have a liquidation preference of $5.00 per
share, pay dividends at a rate not to exceed twelve percent (12%) annually, and
are convertible to common stock upon demand at the following conversion rates:
Series H Sufficient number of shares of common stock worth an amount equal to
the par value of the preferred stock based upon the market value of the common
stock at the date of conversion.
Series I 5 shares common for 1 share preferred
Series J 1 share common for 1 share preferred
Series K 2 shares common for 1 share preferred
Series L 3 shares common for 1 share preferred
Series M 4 shares common for 1 share preferred
Series N 10 shares common for 1 share preferred
The Company's income (loss) per share was calculated using 5,345,439 weighted
average shares outstanding for each of the years ended December 31, 1997 and
1996, respectively. Although convertible preferred stock is a common stock
equivalent, with a conversion rate of approximately 10
Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 38
<PAGE>
shares of common stock (based upon an approximate market price for common stock
of $0.50) for each share of preferred stock, preferred stock conversion has not
been included in the calculation of earnings per share in that to do so would be
antidilutive.
Note 7 - Income taxes
- ---------------------
Deferred income tax assets and liabilities are summarized as follows at December
31:
1997 1996
---- ----
Deferred tax assets
attributable to operating
loss carry forwards $ 3,500,000 $ 1,380,000
Valuation allowance due to
uncertainty surrounding
realization of operating
loss carry forwards (3,500,000) (1,380,000)
Deferred tax liabilities -- --
----------- -----------
Total deferred taxes $ -- $ --
=========== ===========
The Company has available at December 31, 1997, unused operating loss carry
forwards, which may be applied against future taxable income, that expire as
follows:
Amount of Unused Operating Expiration During
Loss Carry forwards Year Ended December 31,
------------------- -----------------------
$ 200,000 2001
550,000 2002
1,200,000 2003
300,000 2004
490,000 2007
340,000 2008
320,000 2009
650,000 2010
1,050,000 2011
4,700,000 2012
----------
$9,800,000
==========
Note 8 - Commitments, risks and contingencies
- ---------------------------------------------
The Company managed for various charities a bingo hall in Piedmont, Alabama. A
political effort was mounted in 1998 to eliminate public bingo parlors in the
Piedmont area. As of the date of these financial statements, it appears that
management will be forced to liquidate its bingo facility at a large loss.
Management has estimated that under the current circumstances, the facility can
be sold for only
Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 39
<PAGE>
approximately $2,000,000 (net of substantial legal and other settlement costs),
and accordingly has reduced the carrying value of such assets to this amount.
Pending sale, the facility is not available for bingo operations, and
accordingly, the Company has no source of income at this time. Proceeds from the
sale should be sufficient to allow the Company to settle all debts and fund
operations until new sources of revenue can be generated.
The Company is in the process of developing bingo productions to be broadcast by
satellite and via the Internet into homes of viewers throughout the United
States. Should local, state, or federal laws change regarding bingo, such
changes could have a material impact on the ability of the Company to generate
future revenues.
The Company has a history of issuing common stock for services difficult to
value or yet to be provided. Approximately 3,000,000 (or 57%) of the common
stock outstanding at December 31, 1997, is restricted in some fashion as a
result of the above transactions. Furthermore, the Company has in prior years
canceled common stock certificates due to non-performance of the third parties
involved in certain of the above transactions. Although no party to such
transactions has yet instigated litigation involving the Company for
cancellation or restriction of related shares, due to the volume of such
transactions, litigation relating to such activity remains a possibility.
Management feels all actions it has taken to cancel or restrict common stock are
with merit, and does not anticipate any material loss being incurred by the
Company relating to future resolution of these matters.
The Company has an employment agreement with Mr. Ron Foster, shareholder and
president, which expires on December 31, 2001. Under the agreement, Mr. Foster
is entitled to $130,000 in minimum annual salary, cash bonuses of the lesser of
10% of revenues or 5% of pre-tax profits, and stock bonuses equivalent to 10% of
pre-tax profits before depreciation. To date, Mr. Foster has accepted no more
than $120,000 per year as adequate compensation under the contract. There is no
guarantee that Mr. Foster will continue to accept an amount less than that
stipulated in the agreement.
The Company sold stock to a production company in California several years ago.
As a result of the sale, the production company was to provide approximately
$400,000 of production facility time and services at no additional charge. No
value has been recorded for such services provided and to be provided in that
their market value is not subject to reasonable estimation and that realization
of future services is not assured.
Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 40
<PAGE>
Summary Financial Data
Set forth below is selected financial information of the Registrant and its
consolidated subsidiaries as derived from the audited statements of income
(loss) for the last two calendar years, from the balance sheets for the periods
then ended. The selected financial information should be read in conjunction
with the financial statements (including the notes thereto) filed with this
Registration Statement and are qualified by reference to such financial
statements.
December 31, December 31,
1997 1996
----------- -----------
Statement of Operations Data
- ----------------------------
Gross Revenues 544,662 421,128
Income from Operations(Loss) (4,723,202) (1,049,719)
Net Income (Loss) per share * (.88) (.20)
Balance Sheet Data
- ------------------
Assets
- ------
Current Assets 118,160 190,624
Property & equipment, less
accumulated depreciation 2,752,900 7,026,112
Other Assets 84,174 224,288
----------- -----------
Total Assets 2,955,234 7,441,024
Liabilities
- -----------
Current Liabilities 847,634 484,647
Long Term Liabilities Nil 240,229
Total Liabilities 962,288 724,876
Total Stockholders' Equity 1,992,946 6,716,148
- -------------------------- ----------- -----------
Total Liabilities and Equity $ 2,955,234 $ 7,441,024
- ---------------------------- ----------- -----------
- -----------------
* See above. Per share data is computed based on the weighted average of
common stock outstanding as of the report date.
Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 41
<PAGE>
Item 8. Charges in and Disagreements with Accountants on Accounting and
- -----------------------------------------------------------------------
Financial Disclosure
--------------------
None
Item 9. Directors, Executive Officers, Promoters and Control Persons
- --------------------------------------------------------------------
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the names and ages of the members of the
Registrant's board of directors and its executive officers, the positions with
the Registrant held by each, and the period during which each such person has
held such position.
Name Age Position Since
- ---- --- -------- -----
Ronald Foster 56 President/Chairman of the Board 1986
William Beggs 54 Director 1998
Karien Anderson 47 Secretary/Treasurer/Director 1997
Claude Pichard 43 Director 1986
Mel Ray 58 Director 1997
------
Messrs. Fosters, Mr. William Beggs, Mr. Prichard and Ms. Anderson are all
engaged with the Registrant's business on a full time basis.
All directors hold office until the next annual meeting of stockholders of the
Registrant (currently expected to be held during April 1999) and until their
successors are elected and qualified. Officers hold office until the first
meeting of directors following the annual meeting of stockholders and until
their successors are elected and qualified, subject to earlier removal by the
board of directors. There are currently no committees of the board of directors.
Biographies of the Registrant's Executive Officers and Directors
- ----------------------------------------------------------------
Ronald Foster
- -------------
Mr. Foster, 56, is presently Chairman, President, Chief Executive Officer, and
Executive Producer for SBI Communications, Inc. He has been working with the
Registrant since its inception in 1984. His
Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 42
<PAGE>
primary responsibilities include finance, marketing and technical review. In
addition to his responsibilities with the Registrant, Mr. Foster has held a
number of other management positions over the years. From 1984 to 1986, he was
executive vice president and producer of Pioneer Games of American Satellite
Bingo, in Albany, Georgia. Mr. Foster was also owner and operator of Artist
Management & Promotions where he was responsible for coordinating television
entertainers, sports figures and other celebrities for department store
promotions. Since 1987, Mr. Foster has served as president and director of
Ed-Phills, Inc., a Nevada corporation and is now an executive vice president and
member of the board of directors of Golden American Network, a California
corporation. Since 1984, he has also been the president and chief executive
officer of ROPA Communications, Inc., which owns and operates WTAU-TV-19 in
Albany, Georgia. He created and produced "Stock Outlook 87, 88, and 89," a video
presentation of public companies through Financial News Network (FNN), a
national cable network. Mr. Foster also has experience as technical director and
associate producer for numerous national live sports broadcasts produced by ABC,
CBS and WTBS. Mr. Foster is Driector/Producer/Writer of the Registrant
Interactive Broadcast Programs.
Karien Anderson
- ---------------
Ms. Anderson is 47 years old and resides in Piedmont, Alabama. Ms. Anderson has
extensive experience in executive secretarial business, including government and
private sectors. She has extensive background in the field of advertising,
marketing, special event promotions, contract management, personnel management
and real estate. Ms. Anderson currently holds a real estate licence. Ms.
Anderson has been involve as coordinator for non-profit association for the last
eighteen years. She is currently employed as Secretary and property manager for
SBI Communications, Inc.
Claude Pichard
- --------------
Mr. Pichard, 44, has been a Vice President and a director for the Registrant
since 1986. His primary responsibilities include directing and developing the
interactive Bingo and auction programs. Mr. Pichard has over twenty years of
television experience as a producer, director and scriptwriter. He served as
creative services director at WCTV in Tallahassee, Florida, where he headed an
award-winni ng team of directors, writers and artists for the number one station
in its market. He has also worked with numerous Hollywood-based game shows and
was the director for the Bolivian National Lottery game. In addition to his
responsibilities with the Registrant, Mr. Pichard also serves as a research and
training specialist with the Florida Department of Law Enforcement where he
supervises the production of training tapes, public service announcements and
media related courses. Mr. Pichard holds a bachelor of science degree in mass
communications from Florida State University.
Mel Ray
- -------
Mr. Ray is 58 years old and resides in Tampa, Florida. Mr. Ray has been an
executive in the bottled and natural gas industries for more than 30 years, and
currently manages six gas companies in the state of Florida, ranging from the
west coast Tampa area all the way to the east coast of Florida. Mr. Ray's
extensive experience in utility companies gives him a great understanding of
local and federal government regulations. Due to the nature of his business, Mr.
Ray also possesses knowledge concerning hazardous materials transportation, bulk
purchasing, retail sales, management, marketing, acquisition, and personnel. Mr.
Ray has 20 years of experience operating some of the most profitable
Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 43
<PAGE>
divisions of Tropi-Gas, Petrolane, and Star Gas as an executive both in its
international and domestic markets. Mr. Ray is an officer and director of the
company.
Williams Beggs
- --------------
Mr. Beggs is 54 years old and resides in Fort Lauderdale, Florida. Mr. Beggs has
been a member, in good standing, of The Florida Bar since 1973. Mr. Beggs
practices real estate and corporate law in the Fort Lauderdale area.
Item 10 Executive Compensation
- ------------------------------
The Summary Compensation Table below sets forth all compensation paid to the
Officers and Directors of the Registrant during the Registrant's year ended
December 31, 1996 and 1997. Prior to June of 1992, the date on which a change in
control of the Registrant was effected and current management took over their
respective positions, previous management conducted no business, the
Registrant's was inactive and no compensation was paid or deferred to and of the
Registrant's officers or directors.
1996 Summary Compensation Table
-------------------------------
<TABLE>
<CAPTION>
Name Annual Compensation Long Term Compensation
and Awards Awards LTIP All
Principal Restricted Restricted Pay- Other
Position Salary Bonus Other Stock Options outs Compensation
- -------- ------ ----- ----- ----- ------- ----- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Ronald Foster ** 5 * * * * * *
Claude Pichard + * * * * * * *
Mel Ray (2) * * * * * * *
Thomas Barrett(4) 7 * * * * * *
<CAPTION>
1997 Summary Compensation Table
-------------------------------
Name Annual Compensation Long Term Compensation
and Awards Awards LTIP All
Principal Restricted Restricted Pay- Other
Position Salary Bonus Other Stock Options outs Compensation
- -------- ------ ----- ----- ----- ------- ----- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Ronald Foster ** (5) * * * * * *
Claude Pichard + * * * * * * *
Mel Ray (2) * * * * * * *
Karien Anderson(1) (6) * * * * * *
Thomas Barrett (4) (8) * * * * * *
- ---------------
</TABLE>
* None.
Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 44
<PAGE>
** President, Chairman and Chief Executive Officer.
*** Former Secretary, Treasurer and Chief Financial Officer.
+ Vice President.
(1) Secretary and Treasurer.
(2) Director.
(3) Director.
(4) Vice President.
(5) $130,000.
(6) $ 30,000.
(7) $ 1,500.
(8) $ 30,000.
(9) No person listed has any options to acquire securities of the kind required
to be disclosed pursuant to instruction 1 of Item 403 of Regulation SB.
Employment Agreements
- ---------------------
The Registrant is a party to an employment agreement with Ronald Foster, a copy
of which is filed as an exhibit to this registration statement. The following
summary thereof is qualified in its entirety by reference to such exhibit.
On January 1, 1992, Mr. Foster entered into a ten year employment agreement with
the Registrant, renewable thereafter for continuing one year terms unless one of
the parties provides the other with written intention not to renew, on or before
the 180th day prior to expiration of the then current term. Although the
agreement can be terminated by the Registrant for cause, or the Registrant's
stockholders can refuse to comply with its terms by not re-electing Mr. Foster
as a director, such events accelerate Mr. Foster's rights to compensation under
the Agreement.
The Agreement provides the Registrant with an obligation to defend and indemnify
Mr. Foster to the fullest extent legally permitted, and calls for the following
compensation:
(a) Mr. Foster is entitled to an annual bonus payable in shares of the
Registrant's common stock, determined by dividing 10% of the Registrant's
pre-tax profits (excluding depreciation) for the subject calendar year by
the average bid price for the Registrant's common stock during the last five
trading days prior to the end of the last day of each year and the first
five days of the new year, provided, however, that the agreement shall have
been in effect for at least one business day during the subject year.
(b) Mr. Foster is entitled to an annual cash bonus in a sum equal to 5% of the
Registrant's gross annual income or 10% of the Registrant's net pre-tax
profit (excluding depreciation), whichever is less.
Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 45
<PAGE>
(c) Mr. Foster is entitled to a salary starting at $2,500.00 per Week, but
subject to review on a quarterly basis, with the expectation that it will be
substantially increased as increased profits and cash flow from operations
permit.
(d) In addition to the foregoing, Mr. Foster is entitled to a benefit package
equal to the most favorable benefit package provided by the Registrant or
its subsidiaries to any of their employees, officers, directors, consultants
or agents.
All required payments are accruing until such time as the Registrant has
adequate funds to meet its operating expenses and commitments.
Item 11. Security Ownership of Certain Beneficial Owners & Management
- ---------------------------------------------------------------------
The following table sets forth, as of the date of this Registration Statement,
the number and percentage of shares of common stock owned of record and
beneficially by any group (as that term is defined for purposes of Section
13(d)(3) of the Exchange Act), person or firm that owns more than five percent
(5%) of the Registrant's outstanding common stock (the Registrant's only class
of voting securities).
Name and Address of Amount of Nature of Percent of
Beneficial Owner * Shares Ownership Class
- ------------------ ------ --------- -----
Ronald Foster 1,632,089 Record & 32%
103 Firetower Road Beneficial
Leesburg, Georgia, 31763
Larry Cahill 1,000,000 Record & 19%
3330 Southgate Court Beneficial
Cedar Rapids, Iowa 52404
Michael Graham 500,000 Record & 10%
1804 Cherry Lane Beneficial
Bluefield, West Virginia 24701
- ---------------
* Includes all stock held either personally or by affiliates.
(b) Security Ownership of Management
- ------------------------------------
Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 46
<PAGE>
The following table sets forth, as of the date of this Registration
Statement, the number and percentage of the equity securities of the Registrant,
its parent or subsidiaries, ,owned of record or beneficially by each officer,
director and person nominated to hold such office and by all officers and
directors as a group.
Title of Name of Amount Nature of Percent of
Class Beneficial Owner Shares Ownership Class
- ----- ---------------- ------ --------- -----
Common Ronald Foster 1,632,089 ** 32.00%
Common Karien Anderson 0 *** 00.00%
Common Claude Pichard 10,000 ** 00.07%
Common Betty Rodgers 5,000 *** 00.035%
Common Williams Beggs 0 *** 00.00%
Common All officers and directors
as a group (5 people) 1,647,089 ** 33.05%
- ---------------
* Includes all stock held either personally or by affiliates.
** Record & Beneficial.
*** Not Applicable.
To the best knowledge and belief of the Registrant, there are no arrangements,
understandings, or agreements relative to the disposition of the Registrant's
securities, the operation of which would at a subsequent date result in a change
in control of the Registrant.
Item 12. Certain Relationships and Related Transactions
- -------------------------------------------------------
There are no family relationships among directors, executive officers or persons
chosen by the Registrant to be nominated as a director or appointed as an
executive officer of the Registrant of any of its affiliated subsidiaries.
Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 47
<PAGE>
PART IV
-------
Item 13. Index to Exhibits
- ---------------------------
Description of Exhibits
-----------------------
Page or
Exhibit Source of
Number Incorporation Description
- ------ ------------- -----------
2. .1 *** Plan of Reorganization: Agreement and Plan of Merger
[sic] by and among Satellite Bingo, Inc., a Georgia
corporation, and Supermin, Inc. dated September 2,
1986.
.2 *** Re-incorporation in Delaware Instruments.
3. Constituent Documents:
----------------------
.1 *** Articles of Incorporation, as amended
.2 *** Bylaws, as amended
10. Material Contracts:
-------------------
.1 *** Agreements for Purchase of Piedmont Bingo Hall
(Frontier Palace).
.2 *** Employment Agreement between Registrant and
Ronald Foster.
.3 Joint Venture Agreements:
-------------------------
*** .1 Joint Venture Agreement with VPACS Limited (a New
York corporation)
*** .2 Cahill Agreement
*** .3 La Yate Company Limited (Hong Kong)
*** .4 PandaAmerica/Glendale Studios
.4 Bingo Hall Agreements:
----------------------
*** .1 Chief Strikeaxe Trading Post (Oklahoma)
*** .2 DCA Services Division, Fort Benning, Georgia
.5 *** Lease and Service Provider Agreements with Piedmont
Jaycees.
.6 Program & Production Agreements:
--------------------------------
*** .1 Glendale Studios Production Agreements
*** .2 Las Vegas Television Network, Inc.
.7 *** Lease Agreement dated January 17, 1996, with
Integrated Telephony Products, Inc.
Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 48
<PAGE>
Page or
Exhibit Source of
Number Incorporation Description
- ------ ------------- -----------
.8 Agreements with Bradley M. (Brad) Tate:
---------------------------------------
*** .1 Memorandum of Service Agreement
*** .2 Consulting Agreement
.9 *** Alamo Leasing Agreement
.10 Letters of Intent:
------------------
*** .1 Glendale Studios, Inc.
*** .2 Cherokee Indians of Georgia, Inc.
*** .3 Promotions International Corporation.
.11 Licensing Agreements:
----------------------
*** .1 Fertina-C, LTD, March 25, 1992 (Greece)
*** .2 Satellite Bingo, Inc. and Luis Manuel Da Costa
Matias, January 18,
1991(Brazil)
*** .3 I.O. Report, C.A., March 23, 1993, (Venezuela)
.12 LACOA Agreements:
*** .1 Lobbyist Engagement Agreement
*** .2 Management Agreement
11. * Statement re computation of per share earnings.
21. ** Subsidiaries of the Registrant.
99. Additional Exhibits:
--------------------
*** .1 Letter from Fletcher, Heald & Hidreth to Ron Foster,
dated April 10, 1992, referencing communications
with Cynthia Young, Assistant Chief, Support of
Litigation, rganized Crime and Racketeering Section
of the Criminal Division, United States Department
of Justice.
*** .2 Letter from Fletcher, Heald & Hidreth to Ron Foster,
dated March 19, 1992, referencing the legality under
federal law of SBI Communications, Inc.'s programs
and planned subscription network.
*** .3 Correspondence between the Federal Communications
Commission and Putbrese, Hunsaker & Ruddy, dated
September 14, 1990 through February 11, 1991,
requesting a request for declaratory ruling the
legality of advertising interactive Bingo games on
cable systems.
Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 49
<PAGE>
Page or
Exhibit Source of
Number Incorporation Description
- ------ ------------- -----------
*** .4 Correspondence between Sutherland, Asbill & Brennan
and the Federal Communications Commission, from July
28, 1986, until some undetermined time in 1987.
*** .5 Opinion letters to Ron Foster from Sutherland,
Asbill & Brennan dated July 11 and 15, 1986.
*** .6 Letter involving the game C-Note, dated June 18,
1993, referencing a prohibition under Section
9-701(1(a) to the offer of games of Bingo and keno
in Nebraska, but noting that such statute would not
appear to prohibit the broadcast of the games into
Nebraska, or, the location in Nebraska of telephone
banks involving offers of the games outside of
Nebraska.
*** .7 Opinion Letter dated November 16, 1995, from Wiley,
Rein & Fielding (Washington, D.C.), re Pay-per-view
Bingo.
*** .8 Ordinance Number 429 (Bingo) dated June 13, 1994,
City Clerk of Piedmont, Alabama.
*** .9 Alabama Constitution, Amendment Number 508, Bingo
Games in Calhoun County.
*** .10 Limited Appraisal of Frontier Palace, dated May 1,
1995, prepared by Phillip C. Ledbetter.
---------
o Incorporated by reference from the disclosure thereof in the financial
statements filed herewith.
** Incorporated by reference from the disclosure thereof at Part I, Item I
(Description of Business), located at page 3 of this registration
statement.
*** Provided in the original filing and/or first amendmentfo the 10-SB.
Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 50
<PAGE>
Additional Information
----------------------
Headquarters
------------
SBI Communications, Inc.
P.O. Box 729 - 103 Firetower Road
Leesburg, GA 31763.
Subsidiaries
------------
SBI Communications, Inc., a Nevada Corporation
955 South Virginia Street; Suite 116; Reno, Nevada 89502
Satellite Bingo, Inc., a Georgia Corporation
103 Firetower Road - P. O. Box 729, Leesburg, Georgia 31763
Officers & Directors
--------------------
Ronald Foster: President, Chairman of the Board, Chief Executive Officer
Karien Anderson: Secretary/Treasurer/Director
Claude Pichard: Vice President/Director
Mel Ray: Director
Williams Beggs : Director
Auditors
--------
John Ratliff
Daniels and Ratliff Professional Group, Inc.
301 South McDowell Street; Suite 1014; Charlotte, North Carolina 28204
Transfer Agent
--------------
Corporate Stock Transfer
370 17th Street; Suite 2550; Denver, Colorado 80202
Exhibits to this Form 10-KSB will be provided, subject to payment of actual copy
costs, to shareholders of the Registrant upon written request addressed to
Karien Anderson, Secretary, SBI Communications, Inc., at the Registrant's
headquarters listed above.
Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 40
<PAGE>
Signatures
----------
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, as amended, the Registrant has duly caused this First Amended
Registration Statement to be signed on its behalf by the undersigned, hereunto
duly authorized.
SBI Communications, Inc.
Dated: April 30, 1998
/s/Ronald Foster/s/
Ronald Foster
Chairman, President & Chief Executive
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf or the
registrant and in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Ronald Foster Chairman, President & April 30, 1998
- ----------------- Chief Financial Officer
Ronald Foster
/s/ Karien Anderson Director, Secretary, Treasurer April 30, 1998
- -------------------
Karien Anderson
/s/ Claude Pichard Director, Vice President April 30, 1998
- ------------------
Claude Pichard
/s/ Mel Ray Director April 30, 1998
- ------------------
Mel Ray
/s/ Williams Beggs Director April 30, 1998
- ------------------
Williams Beggs
Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 41
<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report April 30, 1998
SBI Communications, Inc
(Exact name of registrant as specified in its charter)
...........................................................................
Delaware 0-28416 58-1700840
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification)
103 Firetower Road - P.O. Box 729 - Leesburg, Georgia 31763
(Address of principal executive offices) (Zip Code)
........................(912) 759-0701...............................
Registrant's telephone number, including area code
A change of address for the Company to be effective April 30, 1998
The new address: SBI Communications, Inc
P. O. Box 729
103 Firetower Road
Leesburg, Georgia 31763
- 42 -
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF SBI COMMUNICATIONS, INC. FOR THE YEAR ENDED
DECEMBER 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS. (In thousands, except per share amounts)
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 22,228
<SECURITIES> 0
<RECEIVABLES> 10,867
<ALLOWANCES> 0
<INVENTORY> 86,065
<CURRENT-ASSETS> 118,160
<PP&E> 3,120,102
<DEPRECIATION> (367,202)
<TOTAL-ASSETS> 2,752,900
<CURRENT-LIABILITIES> 962,288
<BONDS> 0
0
8,365,000
<COMMON> 5,345
<OTHER-SE> (6,377,399)
<TOTAL-LIABILITY-AND-EQUITY> 2,955,234
<SALES> 411,033
<TOTAL-REVENUES> 544,662
<CGS> 180,563
<TOTAL-COSTS> 797,234
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 82,637
<INCOME-PRETAX> (693,879)
<INCOME-TAX> 0
<INCOME-CONTINUING> (693,879)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (693,879)
<EPS-PRIMARY> (.88)
<EPS-DILUTED> 0
</TABLE>
