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, 1998
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) 759-9176
Leesburg, GA 31763 Issuer's telephone number
(Address of Principal executive
offices) (Zip code)
============================================================================
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 __
Registrant's revenues for its most current fiscal year: $ 0.00
Aggregate market value of the voting stock held by
non-affiliates as of March 30, 1999: $1,336,360.00
Number of common shares outstanding as of latest
practical date at $.001 par value: 5,570,439
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__
==============================================================================
Dated March 30, 1999
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___________________________________________________________________________
Table of Contents
Item Page
Number Number Item Caption
Part I
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
Item 5. 16 Market Price of and Dividends on the Registrant's
Common 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
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
Item 13. 45 Exhibits, Financial Statement Schedules, and Reports
on Form 8-K
Signatures 49
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Part I
Item I. Description of Business
General
SBI Communications, Inc., a publicly held Delaware corporation (the "Company"),
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 Company 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, 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 Company's current business (the "SBI Subsidiary"). In
conjunction with such reorganization, the former stockholders of the SBI
Subsidiary, acquired control of the Company and the Company changed its
name to Satellite Bingo, Inc.
On March 10, 1988, the Company changed its name to SBI Communications, Inc.,
its current name, and on January 28, 1993, the Company 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 Company has three subsidiaries, SBI Communications, Inc., an Nevada
corporation; Satellite Bingo, Inc., a Georgia corporation and SBI
Communications, Inc., a Alabama corporation. Unless the context requires
otherwise, the term "Company" 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
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.
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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.
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.
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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
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 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)
The Company owns and leases a facility to local charities 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 jackpots and the
number of weekly charity sessions that can be conducted except in Piedmont
with no limits and ten hour sessions, five days a week. The company dose not
lease this facility for bingo and the facility for sell.
The company is also considering renovation to turn the Piedmont facility into
a retail Mall. This is needed in Piedmont and would be well received by the
City and local community.
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Florida
The Company will be opening a new facility in Fort Lauderdale, Florida. This
facility will open in the third quarter of 1999.
California
The Company website is located in Glendale, California at the company
production facility.
The Company has a bingo program operating over the PandaAmerica
Shopping Network.
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Expansion Plans
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 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.
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Other Products or Services and Their Markets
1. Broadcast And Internet
The Company 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 Company'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
Introduction
Globalot Bingo and Satellite Bingo are proprietary interactive Bingo games which
were broadcast by the Company in the past via satellite to participating cable
and television stations. The Company plans to resume expanded broadcasts in the
near future.
The use of telephones for game card distribution makes it possible for home
viewers to also participate in the Company'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. The company's plans to enter into a license
agreement with a major Spanish Network to broadcast its interactive
programming.
Operation
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 Company 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). 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 Company 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 Company will award a $20,000.00 dollar grand
prize to the first person covering an entire card. Cards obtained to play
the Company's 24 hour program will be good for the entire week, including the
Saturday Million Dollar Globalot game.
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As additional players participate, the Company 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.
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 Company'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. All elements of the broadcast
game are being conducted on the Company website.
Technology
The Company 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 Company. 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 Company 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 announcement 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 $9.00 or $1.00 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 Company.
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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 Company.
The Company 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 Company 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 Company receives a portion of each
call paid, payment being different in each originating country. International
callers can obtain play information over the Internet.
The Company'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 Company'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.
Company's Income
The Company'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
The Company websites are located at http://www.sbicommunications.com,
http://www.globalot.com http://www.sbid.net, http://www.sbicom.com and
http://www.abingo.com. Shopping, travel, bingo games and other items will
be available for the consumer first quarter-1999. A club membership will be
required, and membership fee will be $19.95 per month. To gain access to the
site and take advantage of services and games available you must be a member.
All bingo game are free and anyone may acquire free game cards by sending the
Company a request and a SASE. Bingo games will be player 24 hours 7 days a week.
Members may play all games available. Upon winning, the player will be sent an
e-mail disclosing the game number, amount of winnings and be featured in the
winners circle.
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IMPACT OF THE YEAR 2000
The year 2000 risk is the result of computers being written using two digits
rather than four digits to define the applicable year. Computer programs that
have sensitive software may recognize a date using "00" as the year 1900
rather than the year 2000. As a result, computer systems and/or software used
by many companies and government agencies may need to be upgraded to comply
with year 2000 requirements or risk systems or miscalculations causing
disruptions of normal business activities.
STATE OF READINESS
Based on as internal assessment, SBI believes that its software programs,
both those development internally and purchased from material outside vendors,
are year 2000 compliant or will be by December 31st 1999. SBI began assessing
its state of year 2000 readiness during September 1998. This included reviewing
the year 2000 compliance of the following:
SBI internally developed proprietary software incorporated in the SBI
broadcast bingo and Internet programs;
Third-party software vendors;
SBI will continue to require its vendors of material hardware and software
to provide assurances of their year 2000 compliance.
COSTS
To date, SBI has incurred approximately $30,000.00 of costs in identifying and
evaluating year 2000 compliance issues. Most of SBI expenses have related to.
And expected to continue ro relate to the operating costs associated with time
spent by employees in the evaluation year 2000 compliance matters. At this time,
SBI does not possess the information necessary to estimate the potential costs
of future revision to software relating to the SBI programs should revision by
required of the replacement of third-party software, hardware of services, if
any, that are determined to not be year 2000 compliant. Although SBI believes
that its software programs, both development internally and purchased from
outside vendors are either already year 2000 compliant or will be by December
31st, 1999,. Failure to identify non year 2000 compliant software could have a
material and adverse effect on SBI's business, results of operations and
financial condition.
RISKS
SBI is not currently aware of any significant year 2000 compliance problems
relating to the broadcast or Internet or other software systems that would
have a material and adverse effect on business, results of operations and
financial condition.
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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
Interactive Technology
A number of important trends support management's belief that the Company is
re-entering the interactive television programming market at the right time
with the right products. As the 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.
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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 AOL, AT&T, 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
Bingo is derived from as Italian lottery game initiated in 1530, and still held
every Saturday in Italy. It grew throughout Europe over the next two centuries.
In 1929, a game called "Beano" was played at a carnival near Atlanta, Georgia.
The game was played with dried beans, a rubber number stamp and some cardboard.
Players won when they filled a line of numbers on their card.
The game of "Bingo" moved to New York, and quickly spread up and down the East
Coast. By 1934, an estimated 10,000 bingo games were played every week. In
1996, approximately $6 Billion was spent on active bingo in North America
alone. There are 64,000 charitable bingo centers in North America with over
60,000 organizations licensed to operate bingo. Bingo is the most accepted form
of gaming by the public. There are approximately 60 millions people who visit
a bingo facility each month and spend an average of $22.00 per visit. Bingo is
expected to maintain or possibly increase its market share of total gaming
industry receipts consistent with an aging U.S. population, which has more
disposable income and time and enjoys playing bingo more than other age groups.
Management believes that the past success of the Company'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.
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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 Company's nationally and internationally interactive broadcast programs
The Company's Competitive Position
The Company 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
The Company 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 Company 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 Company to successfully compete with other
game shows.
Other Activities
The Company 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 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
None of the Company'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.
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3. Dependence on One or a Few Major Customers
The Company's previous operations were highly reliant on local charities. Its
former broadcast operations and contemplated future Internet Web Site
operations are not expected to be reliant on any single or small group of
customers.
Employees
As of December 31, 1998, the Company had 6 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
376 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.
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.
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Item 2 - Properties
The Company's principal offices were located in Piedmont, Alabama in facilities
purchased by the Company on December 16, 1994, for $6,500,000 (paid in shares of
the Company'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
Company and maintained properties therein, has been leased on a month to month
basis by the Company to Piedmont Jaycees, Inc. since August 10, 1995 until
terminated January 1, 1998. 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 startup period. The Company 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 Company pays $1,000 per month. The lease is scheduled to
expire on December 31, 1998; however the Company is confidant that the lease
would be renewed on favorable terms.
Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements
or Labor Contracts, Including Duration
The Company 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 Company 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 Communications, Inc., dated September
14, 1993.
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Item 3 - Legal Proceedings
Involvement in Certain Legal Proceedings
On April the 28th 1995 the State of Alabama place a tax lien on the previous
owner, Cranberry-Magnetite for admission taxes, in the amount of $750,000.00.
The company received a warranty deed from Cranberry Magnetite. After a legal
action by Cranberry Magnetite failed in 1998 the company paid this tax
liability on behalf of Cranberry Magnetite. The company will take any and all
legal action to recover these funds.
In April of 1995 two of the employees of the company's subsidiaries (SBI
Communications, Inc. of Alabama) were named as defendants in a legal action in
Alabama. This action alleges that the defendant's bingo game, which was
operate by the charity; 1) comprise a illegal lottery, which violates the state
constitution; 2) further comprise that the equipment (a computer) was an illegal
gaming device. After appeals to Circuit and State Supreme court failed, the
defendants were incarcerated and later place on 24 months probation which
will end November 14th 1999. This was a misdemeanor and a first offence.
The Company believes that this action was completely without merit and did
defend vigorously.
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 1998. The Company's annual shareholder meeting with
voting on proxy issues is on April 28, 2000.
PART II
Item 5. Market Price of and Dividends on the Company's Common Equity and
Related Stockholder Matters
Preferred Stock
All attributes of the currently unissued preferred stock will be determined by
the Company'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 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.
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Market for Common Equity
The Company's stock is traded on the NASDAQ OTC Electronic Bulletin Board. The
Company currently has 5,570,439 shares of stock outstanding, with 1,450,000 in
the public float. There are approximately 3,240 shareholders of record. For
the fiscal year ended December 31st, 1998 the Company reported revenues of
$0.00 and a net loss of $280,209.00.
The Common Stock of Company has been traded over-the-counter since 1983. Its
trading symbol is "SBID." No established public trading market exists for the
Common Stock of Company 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
128,000 shares of preferred stock which are convertible into common stock.
The Company is in the process of re-purchasing 1,500,000 of preferred
shares from the previous owner after paying the State of Alabama
$750,000.00 in tax liens that were in place against the previous owner
pertaining to the 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 Company's common equity; and
There are approximately 5,570,439 shares of common stock which will become
eligible for sale by December 31, 1998, pursuant to the provisions of
Securities and Exchange Commission Rule 144.
The Company 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.
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Common Stock
Date Low High
Fiscal 1997 $ 0.1875 $0.375
-----------
Fiscal 1998
-----------
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.
Dividend Policy
The Company has never paid any dividends. it is the present intention of the
Company 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 Company's board of directors then serving will resolve
to declare them.
Market
The Company'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 Company 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.
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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. 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).
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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 Company believes that its securities qualify
under this exemption.
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.
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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, 1998, the latest practicable date for which information is
available, the Company's management was of the opinion that the Company had
approximately 3,240 common stock holders.
Dividends
There have been no cash dividends declared or paid since the inception of the
Company and no dividends are contemplated to be paid in the foreseeable future.
Description of Securities
General
The Company 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, 1998, 5,570,439 shares of Common Stock were outstanding
(excluding the 2,500,000 shares held but not yet allocated by the Company's
Employees' Trust) and held of record by approximately
3,240 persons. In addition, 1,628,000 shares of preferred stock were
outstanding, and held by approximately five persons. The Company plans to
repurchase 1,500,000 preferred shares.
Corporate Stock Transfer, 370 17th Street, Suite 2350; Denver Colorado 80202,
acts as transfer agent and registrar for the Company's common and preferred
stock.
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Item 6. Management's Discussion and Analysis of Financial Condition and
Results of Operations and Plan of Operation.
Introduction
The Company is currently in the development stage of its business cycle. Since
its inception, the Company 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 Company 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 Company. 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 Company. The majority of future revenues, however, are not
anticipated to occur in either of these areas. The Company 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 Company 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 begin its bingo programs on the Internet. Overall, management
hopes to be able to generate net revenues of $10 million annually from this
area of business. The Company also has plans to
expand operations through the acquisition of television production
facilities and rights to a television buying show. This would allow the
Company 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 Company, a major international shop at home
entity and a telecommunications company. Webinfotv.net, Inc. a wholly owned
subsidiary of the Company was formed in June 1999
in order to become a dedicated Internet Service Provider for 24 hour on line
service. That is, it will provide the computer and communication equipment
for consumers and businesses to connect their personal
computers to the Internet 24 hours a day seven days a week. It will also
provide design and programming services to build Internet Web Sites and the
personnel and equipment to maintain these sites. The
company will also provide a television network with programs design to
promote, tour, advertised and provide Information for each website desiring
its services. Simulcasting of live or tape programs via
the Internet and satellite broadcast. The company will have its own website
featuring a 24 hour bingo program, classified ad, trade and barter, auctions,
special events and other service available for its members.
Overall, the company can be characterized as a Broadcast Internet Service
company.
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Webinfotv.net, Inc. is a newly formed Nevada Corporation and a Wholly Owned
Subsidiary of SBI Communications, Inc. We chose this form of organization
because we anticipate aggressive growth and will require additional
capital in the future to support this growth, probably in the form of a
secondary public offering. Webinfotv.net, Inc. is currently in its start
up phase. The management team has been formed, new space has been leased,
equipment and telecommunications have been ordered for delivery within 45-60
days and certain business alliances have been formed.
With the anticipated external financing, we expect to turn a profit within
one year and expect to offer shares of the parent Company to raise additional
capitol by the end of the first year operation.
To accomplish this goal we have developed a comprehensive plan to
intensify our marketing and sales activities, product development,
services expansion and customer support.
The Internet
The Internet is one of the fastest growing phenomenons. The current facts
are; More than 50 million American households are connected to the Internet
with Southeast Florida as one of the fasted growing regions. Currently there
are 150 million users worldwide. Every two seconds, a new user signs up for
Internet access. It is estimated that by the year 2002, 550 million people
will be on-line. The Internet has gained the support of everyone from the
White House to the Department of Revenue to United Parcel Service. Companies
are scampering to become a part of the madness and make a fortune. While
making a fortune is possible, it requires the help of an expert in the field
with specific working knowledge and training in the necessary technologies.
Management feels confident that all will be consummated by year end 1999
allowing the Company to commence operations on a full scale in the
telecommunications business segment.
The Company 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:
Frontier Palace
Piedmont Jaycees did not perform as represented, and management did
not develop business. Gross revenues were 50% of their projections which
did not fulfill agreement in their premises lease: Jaycees
salaries exceeded budgets; operations schedule was not full time.
Therefore, their lease was allowed to not be renewed at the first of 1998.
At the same time, local political influences developed negative local law
changes as a reaction to the Piedmont Jaycees operation and a Bingo
Commission being implemented to oversee all bingo operation
in Calhoun County. Local ordinances are being adopted to limit all charity
bingo operations to the amount of employees and establish a requirement of net
proceeds being donated for charitable purposes, with no revenues to the
employees of the charity.
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In reaction to the above political/legal trends, management of it's
wholly owned subsidiary (SBI Communications, Inc. of Alabama) has a signed
purchase agreement with Regency Communications, Inc. of Dallas, Texas to
purchase the Piedmont property for $7,100,000.00. The sale of this property
should be closed with-in the next thirty days. Regency plans are to have an
inbound telemarketing, fulfilment center and backbone to the Internet at the
Piedmont location. Regency plans to contract with SBI to set all phases of
operation in place. Plans are to employ approximately 250 to 300 employees.
Management is working with technical computer advisors and systems
designers in the Boca Raton/Fort Lauderdale, Florida area and believes that
the local charity Bingo market is more hospitable in Southeast
Florida, rather than northeast Alabama. The company plans to open a facility
in the Southeast Florida area to lease to local charities to conduct bingo
games.
Internet Web Site
The company is establishing a secure web site allowing individuals to
join "A Shopping Club for a fee of $19.95 per month which is a shopping club
for a variety of products, services, Bingo game related events and items,
travel and consumer goods; the opportunity is primarily a shopping club. No
charge is made for Bingo cards, and for allowing members to play an on-going
Globalot Bingo game, with winnings credited to the member's account or delivered
to the member at their option. Payment for membership will be made by credit
card, bank check, debit/ATM cards and by lec billing or "900" telephone number.
The company will host the Internet Web Site and provide fulfillment. The company
will at some point be an Internet Service Provider with server and tee access
to the Internet. The company will generate additional revenues by offering
advertising and its web services to others.
Satellite Bingo.
The company has developed a pay-per-view television game show to be
operate by SBI, at a production studio in Glendale, California. The charge for
a weekly two hour broadcast is $9.95 per subscriber per broadcast; SBI
receives $5.00 with the broadcaster/network company paid the balance.
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Liquidity
The following table summarizes working capital and total assets:
Fiscal Year Ended December 31,
1998 1997
---- ----
Working Capital
($1,670,524) ($ 729,474)
Total Assets $7,610,010 $ 6,984,557
December 31, 1995, the Company'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
Company's operating activities relating to approximately $100,000 in rental
fees collected from charities that sponsor bingo games at the Company's bingo
hall.
At December 31, 1994, the Company 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 Company 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 Company'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 Company was primarily involved in securing licensing
agreements for rights to software and methods of operating
bingo games it had developed.
As the Company continues to operate in the development stage, no significant
cash flow is being generated from operating activities. 1998 was a dormant
year. The Company was not able to generate any revenues from operations.
Shareholders also advanced net funds of $100,000.00 in 1998.
Capital Resources
Since its inception, the Company'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 Company. The Company has also acquired significant assets through the
sale of convertible preferred stock. The Company anticipates continued
expansion of its business through acquisitions using Company stock.
Furthermore, with the bingo hall acquired in 1994 now in operation,
the Company anticipates generation of revenues from the lease of this
facility sufficient to cover administrative costs still being incurred
as the Company moves forward in its development stage.
26
<PAGE>
Results of Operations
The following table sets forth the relative relationship to total revenue
of the revenue categories in the Company's statement of income and
percentage changes (rounded to the nearest whole dollar).
Amount of Total Revenue
Fiscal Year Ended December 31, 1998 1997
---- ----
Revenues:
Licenses & Royalties -0- -0-
Bingo Hall Operations -0- $ 411,033
Kitchen and gift shop revenues -0- 131,703
Other Income -0- 1,926
------ ---------
Total Revenue -0- $ 544,662
------ ---------
In general, the Company experienced insignificant revenues in 1998 as it
attempted to expand and develop its operations. Total revenues were $0.00
for 1998. The Company owns a bingo hall, during 1997
was leases to charities who sponsor bingo games. The Company also provides
management services to assist the charities in the operations of the bingo
games, for which the Company charges a fee. Net revenues related to the
bingo hall operations were only $411,033 in 1997, but have decreased to
$0.00 for the calendar year ended December 31, 1998. 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 Company at this time. For 1996, 1997 and 1998, the Company
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 Company's expenses can be summarized as follows:
Amount of Total Expenses
Fiscal Year Ended December 31, 1998 1997
---- ----
Salaries and related expenses ****** $157,649
Other general and administrative expenses $358,670
Depreciation and amortization $346,742
Interest expenses and finance charges $ 82,637
The most significant expense relates to the amortization of trademark, game
show and computer program assets the Company has developed. The expense is
running $ 265,960 per year. Such assets will be fully amortized at the end
of 1997. For 1997, the Company 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 Company 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 Company
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.
27
<PAGE>
Should the Company 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
Company would change significantly. Management is not able to predict the
impact of such changes on revenues or expenses at this time.
Statement Re Computation of Earnings Per Share
See Notes To Consolidated Financial Statements included elsewhere in this
filing for a description of the Company's calculation of earnings per share.
Item 7. Financial Statement and Summary Financial Data
Financial Statements
The audited consolidated balance sheet of the Company for its years ended
December 31, 1998 and audited 1997 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 Company for its years ended
December 31, 1998 and 1997 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, 1998 and 1997.
__
Consolidated Balance Sheets - December 31, 1998 and December 31, 1997.
__
Consolidated Statement of Income (Loss) for the calendar years ended
December 31, 1998 and December 31, 1997 and from inception until
December 31, 1998.
__
Consolidated Statement of Changes in Stockholder's Equity from
Inception (January 10, 1986) through December 31, 1998.
__
Consolidated Cash Flows for the calendar years ended December
31, 1996 and December 31, 1997 and from inception until December
31, 1998.
__
Notes to Consolidated Financial Statement Statements for the calendar
years ended December 31, 1998 and December 31, 1997.
SBI COMMUNICATIONS, INC. AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
28
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEETS
DECEMBER 31,
<CAPTION>
1998 1997
---- ----
ASSETS
<S> <C> <C>
Current assets:
Cash $ 485 $ 22,228
Accounts receivable, net of allowance for doubtful
Accounts of $ -0- at December 31, 1998 and 1997(Note 8) - 250
Note receivable from affiliates (Note 2) 3,600 9,617
Inventories 79,444 86,065
----------- ------------
83,529 118,160
Property and equipment, net of accumulated
depreciation (Note 3) 7,458,345 6,782,223
Other assets:
Deferred loan costs 5,071 21,109
Deposits 63,065 63,065
----------- ------------
$ 7,610,010 $6,984,557
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Note payable to trust managed by a shareholder $ 150,000 $ 150,000
Mortgage note payable-current portion (Note 5) 1,050,000 239,701
Capitalized leases-current portion 17,284 17,491
Accrued wages due to principal shareholder (Note 2) 355,000 290,000
Advances due to principal shareholder 12,698 -
Account payable and accrued expenses 169,071 150,442
----------- ------------
1,754,053 847,634
Capitalized leases, long-term portion 61,459 62,216
Other notes payable 52,438 52,438
----------- ------------
Total liabilities 1,867,950 962,288
----------- ------------
Stockholders' equity:
Preferred stock, par value $5.00; 10,000,000 shares
authorized; 1,653,000 and 1,693,000 shares issued and
outstanding at June 30, 1998 and December 31, 1998,
respectively 8,265,000 8,465,000
Common stock, par value $.001; 40,000,000 shares
authorized; 5,570,439 shares issued and outstanding
at March 31, 1999 and 5,345,439 as of
December 31, 1998 5,570 5,345
Paid in capital 3,667,118 3,467,343
Accumulated deficit ( 6,195,628) ( 5,915,419)
----------- ------------
5,742,060 6,022,269
----------- ------------
$ 7,610,010 $ 6,984,557
=========== ===========
See accompanying notes to consolidated financial statements
</TABLE>
29
<PAGE>
<TABLE>
SBI COMMUNICATIONS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF LOSS
FOR THE YEARS ENDED DECEMBER 31,
<CAPTION>
1998 1997
----------- ------------
<S> <C> <C>
Revenues:
Bingo hall rent (Note 8) $ - $411,033
Kitchen and gift shop revenues - 131,703
Other income 593 1,926
----------- ------------
593 544,662
----------- ------------
Expenses:
Cost of sales - kitchen and gift shop - 180,563
Administrative salaries and related expenses 73,133 157,649
Facility costs 22,971 49,518
Other general and administrative 65,098 358,670
Travel and Production costs - 102,762
Depreciation and amortization 88,539 306,742
Interest and finance expenses 31,061 82,637
----------- ------------
280,802 1,238,541
----------- ------------
Net loss ($ 280,209) ($ 693,879)
=========== ===========
Net loss per share ($ 0.05) ($ 0.13)
=========== ===========
See accompanying notes to consolidated financial statements
</TABLE>
30
<PAGE>
<TABLE>
SBI COMMUNICATIONS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN
SHAREHOLDERS' EQUITY
FOR THE YEARS ENDING DECEMBER 31, 1997 AND 1998
<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, 1996 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, 1997 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)
--------- ------ --------- --------- --------- ------------ ------------
Excess common stock
issued in Sept., 1998
25,000 shares 25,000
Balance December 31, 1998 5,570,439 $ 5,570 1,673,000 $8,365,000 $ 3,567,343 ($9,944,742) $1,992,946
========= ========== ========= ========== ============ ============ ===========
</TABLE>
31
<PAGE>
<TABLE>
SBI COMMUNICATIONS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31,
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net (loss) ($ 280,209) ($ 693,487)
Adjustments to reconcile net loss to cash
provided (used) by operating activities:
Depreciation and amortization 88,538 341,833
Services paid through reduction in amounts
receivable from affiliates - -
Change in accounts receivable, trade 768 128,234
Change in inventories 6,621 8,148
Change in accounts payable and accrued expenses 86,329 176,569
------------ ----------
Cash (used) by operating activities ( 100,653) ( 38,703)
------------ ----------
Cash flows from investing activities:
Proceed from repayment of notes receivable from affiliate 5,499 -
Purchase of property (real estate) and equipment ( 748,622) ( 40,853)
Decrease (increase) in deposits - 5,023
Loans to affiliates - ( 6,017)
------------ ----------
Cash (used) by investing activities ( 743,123) ( 41,847)
------------ ----------
Cash flows from financing activities:
Loans received from shareholder/affiliates 12,698 -
Repayments of affiliated loans - ( 14,901)
Borrowing on new loans and capital leases $1,050,000 145,000
Repayments on loans and capital leases (239,702) ( 69,256)
Deferred loan costs paid - -
Capitol lease repayments ( 964)
Proceeds from issuance of common stock - -
------------ ----------
Cash flows provided by financing activities $822,033 60,843
------------ ----------
Net increase (decrease) in cash ( 21,743) ( 20,009)
Cash at beginning of year 22,228 42,327
------------ ----------
Cash at end of year $ 485 $ 22,228
============ ==========
Supplemental information:
Income taxes paid $ - $ -
============ ==========
Interest paid $ 28,311 $ 41,144
============ ==========
Items not requiring use of cash
Preferred stock converted ($ 200,000) 0.00
Issuance of common stock $ 200.000 0.00
------------ ----------
Paid in capitol $ - -
------------ ----------
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
</TABLE>
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 1999.
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 1998, the Company's had
no operations due to renovation of the facility located in Piedmont,
Alabama. Under local ordinances, the hall must be leased to a
charity, which was the local Jaycees. As described in Note 8, the Company
is selling its facility and ceasing 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). Inter company 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.
33
<PAGE>
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
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.
34
<PAGE>
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 $120,000 and $130,000 for the
years ended December 31, 1998 and 1997, 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 second mortgage on The Piedmont property. $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, 1999. The note has been extended on a quarter to quarter
basis, with $150,000 remaining outstanding at December 31, 1998. Interest
expense related to this note totaled approximately $15,000 and $15,000 for
the years ended December 31, 1998 and 1997, respectively.
In October, 1995, the Company advanced $25,000 to a shareholder to be repaid
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 1998 1997
----------- ---- ----
Land (see Note 8) $ 250,000 $ 250,000
Building (see Note 8) 6,250,000 6,250,000
Vehicles 5 years 10,920 10,920
Furniture and equipment 5 to 7 years 1,109,182 1,024,296
--------- ----------
7,620,102 7,535,216
Less accumulated
depreciation 367,202 282,085
--------- ----------
$7,252,900 $7,253,131
========== ==========
Depreciation expense totaled approximately $306,000 and $279,000 for the
years ended December 31, 1998 and 1997, respectively.
35
<PAGE>
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:
1998 1997
---- ----
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
----------- ----------
$ - $ -
=========== ==========
Game inventory was expended 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 note was
paid in full in July and has a $00.00 balance at December 31, 1998.
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 was issued. The
adjustment to paid-in capital has been reversed in 1997 with the issuing
of the new certificate.
The company borrowed $1,050,000.00 to pay the State Of Alabama, on behalf of
Cranberry-Magnetite, the previous owner tax liability of $748,422.00 and to
pay the second mortgage to National Mortgage of $263,275. The company is
also securing a loan to refinance the property, renovate and expand the
company business.
36
<PAGE>
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 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 has 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
37
<PAGE>
The Company's income (loss) per share was calculated using 5,570,439 weighted
average shares outstanding for each of the years ended December 31, 1998 and
1997, respectively. Although convertible preferred stock is a common stock
equivalent, with a conversion rate of approximately 10 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:
1998 1997
---- ----
Deferred tax assets
attributable to operating
loss carry forwards $1,500,000 $1,380,000
Valuation allowance due to
uncertainty surrounding
realization of operating
loss carry forwards ( 1,500,000 ) ( 1,380,000)
Deferred tax liabilities - -
-------------- -----------
Total deferred taxes $ - $ -
============== ===========
The Company has available at December 31, 1998, 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
700,000 2012
700,000 2013
----------
$6,500,000
==========
Note 8 - Commitments, risks and contingencies
The Company has a purchase agreement for Regency Communications, Inc. to
sell the facility in Piedmont, Alabama. There were no revenues in 1998 due
to the hall been renovated. This sell should be completed within the next
thirty days.
38
<PAGE>
The Company has developed bingo productions to be broadcast via satellite in
English and Spanish to the television market and the Internet, into homes of
viewers throughout the World. Should local, state, or federal laws change
regarding bingo sweepstakes, 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, 1998, 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.
39
<PAGE>
Summary Financial Data
Set forth below is selected financial information of the Company 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, 1998 December 31, 1997
----------------- -----------------
Statement of Operations Data
Gross Revenues $ -0- 544,662
Income from Operations(Loss) ($ 280,209) ( 693,879)
Net Income (Loss) per share * ( .05) ( .13)
Balance Sheet Data
Assets
Current Assets $ 485 118,160
Property & equipment, less
accumulated depreciation $7,458,345 6,782,223
Other Assets $ 151,180 84,174
---------- -------------
Total Assets $7,610,010 6,984,557
Liabilities
Current Liabilities $ 817,350 847,634
Long Term Liabilities $1,050,000 Nil
Total Liabilities $1,867,950 962,288
Total Stockholders' Equity $5,742,060 6,022,269
---------- -------------
Total Liabilities and Equity $7,610,010 $ 6,984,557
= = = = = = = = = = = = =
______
*
See above. Per share data is computed based on the weighted average of
common stock outstanding as of the report date.
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
Company's board of directors and its executive officers, the positions with
the Company held by each, and the period during which each such person has
held such position.
40
<PAGE>
Name Age Position Since
- ------------- --- -------- -----
Ronald Foster 57 President/Chairman of the Board 1986
William Beggs 55 Director 1998
Karien Anderson 48 Secretary/Treasurer/Director 1997
Claude Pichard 44 Director 1986
Mel Ray 59 Director 1997
______
Messrs. Fosters, Mr. William Beggs, Mr. Pichard and Ms. Anderson are
all engaged with the Company's business on a full time basis.
All directors hold office until the next annual meeting of stockholders of the
Company (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 Company's Executive Officers and Directors
Ronald Foster
Mr. Foster, 57, is presently Chairman, President, Chief Executive Officer, and
Executive Producer for SBI Communications, Inc. He has been working with the
Company since its inception in 1984. His primary responsibilities include
finance, marketing and technical review. In addition to his responsibilities
with the Company, 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 Director/Producer/Writer of the Company Interactive Broadcast
Programs.
Karien Anderson
Ms. Anderson is 48 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.
41
<PAGE>
Claude Pichard
Mr. Pichard, 44, has been a Vice President and a director for the Company
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-winning 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 Company, 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 59 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 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.
William Beggs
Mr. Beggs is 55 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 Company during the Company's year ended
December 31, 1997 and 1998. Prior to June of 1992, the date on which a
change in control of the Company was effected and current management took
over their respective positions, previous management conducted no business,
the Company's was inactive and no compensation was paid or deferred to and
of the Company's officers or directors.
42
<PAGE>
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
- ---------- ------ ----- ----- ----- ------- ---- ------------
Ronald Foster ** (5) * * * * * *
Claude Pichard + * * * * * * *
Mel Ray (2) * * * * * * *
Karien Anderson(1) (6) * * * * * *
Thomas Barrett (4) (8) * * * * * *
____________________________________________________________________________
1998 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
- ---------- ------ ----- ----- ----- ------- ---- ------------
Ronald Foster ** 5 Y * Y * * *
Claude Pichard +(2) * * * * * * *
Mel Ray (2) * * * * * * *
Karien Anderson(1) 6 * * * * * *
___________________________________________________________________________
* None.
** 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) $ 35,500.
(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.
(Y) Yes
Employment Agreements
The Company 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 Company, 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 Company for cause, or the
Company'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.
43
<PAGE>
The Agreement provides the Company 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
Company's common stock, determined by dividing 10% of the Company's
pre-tax profits (excluding depreciation) for the subject calendar year
by the average bid price for the Company'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 Company's gross annual income or 10% of the Company's net
pre-tax profit (excluding depreciation), whichever is less.
(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
Company or its subsidiaries to any of their employees, officers,
directors, consultants or agents.
All required payments are accruing until such time as the Company 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 Company's outstanding common stock (the Company's only
class of voting securities).
44
<PAGE>
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
The following table sets forth, as of the date of this Registration
Statement, the number and percentage of the equity securities of the Company,
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 Company, there are no
arrangements, understandings, or agreements relative to the
disposition of the Company's securities, the operation of which would
at a subsequent date result in a change in control of the Company.
Changes In Control
SBI is unaware of any contract or other arrangement, the operation of which
may at a subsequent date result in a change in control of SBI.
45
<PAGE>
Item 12. Certain Relationships and Related Transactions
There are no family relationships among directors, executive officers or
persons chosen by the Company to be nominated as a director or appointed
as an executive officer of the Company of any of its affiliated subsidiaries.
PART IV
Item 13. Index to Exhibits
Description of Exhibits
Page or
Exhibit Source of
Number Incorporation Description
27 Financial Data Schedule
99 Form 8-K
99 Form 8-K
46
<PAGE>
Additional Information
Headquarters
SBI Communications, Inc.
P.O. Box 729 - 103 Firetower Road - Leesburg, Georgia 31763.
Subsidiaries
SBI Communications, Inc., a Alabama Corporation
376 Hwy 278 Bypass - Piedmont, Alabama 36272
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 Company upon written request addressed to
Lisa Evans acting, Secretary, SBI Communications, Inc., at the Company's
headquarters listed above.
47
<PAGE>
Signatures
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, as amended, the Company has duly caused this First Amended
Registration Statement to be signed on its behalf by the undersigned,
hereunto duly authorized.
SBI Communications, Inc.
Dated: March 28, 1999
/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
Company and in the capacities and on the dates indicated.
Signature Title Date
- ------------------ ----- ----
/s/ Ronald Foster Chairman, President &
Ronald Foster Chief Financial Officer April 28, 2000
/s/ Karien Anderson Director, Secretary, Treasurer April 28, 2000
Karien Anderson
/s/ Claude Pichard Director, Vice President April 28, 2000
Claude Pichard
/s/William Beggs Director April 28, 2000
William Beggs
48
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) 759-9176
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
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 November 11, 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)
P.O. Box 729 - Leesburg, Georgia 31763
(Address of principal executive offices) (Zip Code)
(912) 759-9176
Registrant's telephone number, including area code
..........................................................................
The company's board of directors accepted the resignation of Mr. Mel Ray as
director as of September 10, 1998
<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, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 485
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 79,444
<CURRENT-ASSETS> 83,529
<PP&E> 7,458,345
<DEPRECIATION> 88,538
<TOTAL-ASSETS> 7,610,010
<CURRENT-LIABILITIES> 817,950
<BONDS> 1,050,000
0
8,265,000
<COMMON> 5,570
<OTHER-SE> 5,742,060
<TOTAL-LIABILITY-AND-EQUITY> 7,610,010
<SALES> 0
<TOTAL-REVENUES> 593
<CGS> 0
<TOTAL-COSTS> 182,168
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 31,061
<INCOME-PRETAX> (280,209)
<INCOME-TAX> 0
<INCOME-CONTINUING> (280,209)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (280,209)
<EPS-BASIC> (0.05)
<EPS-DILUTED> (0)
</TABLE>
