Securities and Exchange Commission
Washington, D.C., 20549
FORM 10-QSB
(Mark one)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the fiscal quarter ended June 30, 1999
Commission file Number 0-28416
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
=====================================================================
SBI Communications, Inc.
(Name of small business issuer specified in its charter)
=====================================================================
Delaware 58-1700840
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
P. O. Box 729 - 103 Firetower Road - Leesburg, Georgia 31763
(Address of Principal executive offices) (Zip code)
(912)759-9176
Issuer's telephone number
====================================================================
Securities registered pursuant to 12(b) of the Act: None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock and Preferred Stock
Common Stock $0.001 Par Value - Preferred Stock $5.00 Par Value
(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
requirements for the past 90 days.
YES [ X ] NO [ ]
As of August 11, 1999 the Registrant had 5,570,439 shares of its $0.001 par
value Common Stock Outstanding.
===================================================================
<PAGE>
Table Of Contents
SBI COMMUNICATIONS, INC.
FORM 10-QSB
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements 3
Consolidated Balance Sheets as of
December 31, 1998 and
and June 30, 1999
Consolidated Statements of Operations 4
for the six months ended
June 30, 1998 and 1999
Consolidated Statement of Changes 3
in Shareholders' Equity for the six
months ended June 30, 1999
Consolidated Statements of Cash Flows 7
for the six months ended June 30,
1998 and 1999
Notes to Consolidated Financial State- 6
ments
Item 2. Management's Discussion and Analysis 8
of Financial Condition and Results
of Operations Condition
Part II. OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote 12
of Security Holders
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 14
<PAGE> 2
PART I. FINANCIAL INFORMATION
Financial Statements
SBI COMMUNICATIONS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
June 30, Dec. 31,
1999 1998
ASSETS
Current assets:
Cash $ 485 $ 485
Accounts receivable, - -
Note receivable from affiliates 3,600 3,600
Inventories 79,444 79,444
----------- -----------
83,529 83,529
Property and equipment, net of accumulated
depreciation 7,458,345 7,458,345
Other assets:
Deferred loan costs 5,071 5,071
Deposits 63,065 63,065
----------- -----------
$ 7,610,010 $ 7,610,557
=========== ===========
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 1,050,000
Capitalized leases-current portion 17,284 17,284
Accrued wages due to principal shareholder (Note 2) 355,000 355,000
Advances due to principal shareh older 12,698 12,698
Account payable and accrued expenses 169,071 169,071
----------- -----------
1,754,053 1,754,053
Capitalized leases, long-term portion 61,459 61,459
Other notes payable 52,438 52,438
----------- -----------
Total liabilities 1,867,950 1,867,950
----------- -----------
Stockholders' equity:
Preferred stock, par value $5.00; 10,000,000
shares authorized; 1,653,000 and 1,653,000 shares
issued and outstanding at June 30, 1999 and
December 31, 1998, respectively 8,265,000 8,265,000
Common stock, par value $.001; 40,000,000
shares authorized; 5,570,439 shares issued and
outstanding at June 30, 1999 and 5,570,439 as of
December 31, 1998 5,570 5,570
Paid in capital3,667,118 3,66,118
Accumulated deficit ( 6,195,628) ( 6,195,628)
----------- -----------
5,742,060 5,742,060
----------- -----------
$ 7,610,010 $ 7,610,010
=========== ===========
See accompanying notes to consolidated financial statements.
<PAGE> 3
<TABLE>
SBI COMMUNICATIONS, INC. AND SUBSIDIARY
STATEMENTS OF LOSS
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Bingo hall rent - $ - - $ -
Kitchen and gift shop revenues - - - -
Other income - - 593 593
---------- ---------- ---------- -----------
- - 593 593
---------- ---------- ---------- -----------
Expenses:
Cost of sales - kitchen and gift shop - - - -
Administrative salaries and related expenses 35,000 35,000 73,133 73,133
Facility cost 12,260 12,260 22,971 22,971
Other general and administrative 31,212 31,212 65,098 65,098
Production costs - - - -
Depreciation and amortization 8,019 8,019 88,539 88,539
Interest and finance expenses 24,311 24,311 31,061 31,061
---------- ---------- ---------- -----------
110,802 110,802 ($ 280,802) ($280,802)
---------- ---------- ---------- -----------
Net loss ($ 110,802) ($ 110,802) ($ 280,209) ($ 280,209)
---------- ---------- ---------- -----------
Net loss per share ($__0.02) ($ 0.02 ($ 0.05) ($ 0.05
=========== =========== =========== ============
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 4
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30,
(UNAUDITED)
1999 1998
---- ----
Revenues:
Bingo hall rent $ - $ -
Kitchen and gift shop revenues - -
Other income 593 593
----------- -----------
593 593
----------- -----------
Expenses:
Cost of sales - kitchen and gift shop - -
Administrative salaries and related expenses 73,133 73,133
Facility costs 22,971 22,971
Other general and administrative 65,098 65,098
Production costs - -
Depreciation and amortization 88,539 88,539
Interest and finance expenses 31,061 31,061
----------- -----------
280,802 280,802
----------- -----------
Net loss ($ 280,209) ($ 280,209)
=========== ===========
Net loss per share ($ 0.05) ($ 0.05)
=========== ===========
See accompanying notes to consolidated financial statements.
<PAGE> 5
SBI COMMUNICATIONS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30,
(UNAUDITED)
1999 1998
---- ----
Cash flows from operating activities:
Net (loss) ($ 280,209) ($ 280,209)
Adjustments to reconcile net loss to cash
provided (used) by operating activities:
Depreciation and amortization 72,500 72,500
Amortization of deferred loan costs 16,038 16,309
Charge offs of long-term receivables - -
Change in accounts receivable, trade 768 768
Change in inventories 6,621 6,621
Change in prepaid expenses -
Change in accounts payable and
accrued expenses 83,629 83,629
----------- -----------
Cash (used) by operating activities ( 100,653) ( 100,653)
----------- -----------
Cash flows from investing activities:
Proceeds from repayment of notes receivable
from affiliate 5,499 5,499
Purchase of real estate ( 748,622) ( 748,622)
----------- -----------
Cash (used) by investing activities ( 743,123) ( 743,123)
----------- -----------
Cash flows from financing activities:
Loans from shareholders/affiliates 12,698 12,698
Proceeds From Mortgaged (see note 5) $1,050,000 $1,050,000
Mortgage loan repayments ( 239,701) (239,701)
Capital lease repayments ( 964) ( 964)
----------- -----------
Cash flows provided by
financing activities $822,033 $822,033
----------- -----------
Net increase (decrease) in cash ( 21,743) ( 21,743)
Cash at beginning of period 22,228 22,228
----------- -----------
Cash at end of period $ $ 485 $ 485
============== ============
Supplemental information:
Income taxes paid$ - $ -
============ ============
Interest paid $ 28,311 $ 28,311
============ ============
Items not requiring use of cash:
Preferred stock converted ($0.00) ($ 200,000)
Issuance of common stock $0.00 200.000
----------- -----------
Paid in capital $ - $ -
----------- -----------
See accompanying notes to consolidated financial statements.
<PAGE> 6
SBI COMMUNICATIONS, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999 AND DECEMBER 31, 1998
Note 1 - Selected disclosures
The accompanying unaudited consolidated financial statements, which are
for interim periods, do not included all disclosures provided in the
annual consolidated financial statements. These unaudited consolidated
financial statements should be read in conjunction with the consolidated
financial statements and the footnotes thereto contained in the Form 10-KSB
for the year ended December 31, 1998 of SBI Communications, Inc. (the
"Company"), as filed with the Securities and Exchange Commission. The
December 31, 1998 balance sheet was derived from the unaudited consolidated
financial statements, but does not include all disclosures required by
generally accepted accounting principles.
In the opinion of the Company, the accompanying unaudited consolidated
financial statements contain all adjustments (which are of a normal
recurring nature) necessary for a fair presentation of the financial
statements. The results of operations and cash flow for the six months
ended June 30, 1999 and 1998 are not necessarily indicative of the results
to be expected for the full year.
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.
Note 2 - Related party transactions
The Company accrued salaries payable to the Company's principal shareholder
totaling $65,000 for the two quarters ended June 30, 1999 and 1998,
respectively. All amounts owed to the shareholder are payable on demand.
Note 3 - Net loss per share
The Company's net loss per share was calculated using 5,570,439 and
5,570,439 weighted average shares outstanding for each of the quarters
ended June 30, 1999 and December 31, 1998, 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 4 - Preferred stock activity
In July, 1996, 5,000 shares of preferred stock with a par value of $25,000
were to be issued to cover $20,000 in closing costs relating to the mortgage
note receivable. The Company inadvertently issued 25,000 shares rather than
5,000 shares, and both parties agreed that the related certificate would be
returned and reissued. In that the certificate had not been returned as of
December 31, 1996, the full 25,000 shares were treated as outstanding at
that time, with a related reduction in paid in capital. In the first
quarter of 1997, the certificate was returned, and a new certificate for
5,000 shares was issued. The stockholders' equity section of the balance
sheet as of March 31, 1997, has been adjusted to reflect the reduced number
of preferred shares outstanding, with a corresponding adjustment to paid in
capital.
<PAGE> 7
Note 5 - Mortgage
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.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF 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, 1998, 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 delivered bingo games, game shows and other
similar telecommunication gaming products or services to television
viewers throughout the United States. The Company has also developed
a system that can be integrated into all standard communications channels
including the World Wide Web for interactive play throughout the World.
Our Web site or the company's URLs are http://www.sBid.net,
http://www.sbicom.com, http://www.abingo.com,
http://www.sbicommunications.com, http://www.globalot.com or
http://www.frontierpalace.com. Currently, the Company's is developing its
web site and has a sales for the Alabama property.
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 .
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 Mobile Home Factory Outlet Center, Inc.
of Panama City, Florida to purchase the Piedmont property for
$7,300,000.00. The sale of this property should be closed with-in the
<PAGE> 8
next thirty days. Management is working 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 facilities in the Southeast Florida and Maryland
area to lease to local charities to conduct bingo games.
Mobile Home Factory Outlet Center, Inc. plans to have an Mobile Home
Manufacturing Plant and Sales outlet at the Piedmont location. Plans are
to employ approximately 250 to 300 employees. SBI has enter into a
purchase agreement to purchase an additional eighteen (18) acres of land
directly adjoining it's property in order to make available a total of
thirty-five acres to Mobile Home Factory Outlet Center. The total purchase
with the additional land is $7,300,000.00.
Internet Web Site
The company established a secure web site allowing individuals to become
members in "A Shopping Club" with membership fees of $19.95 per month. The
shopping club will provide a variety of products, services, bingo game
sweepstakes related events and items, travel and consumer goods; the
opportunity is primarily a shopping club. No charge is made to participate
in the bingo games. Games will be available for play 24 hours a day seven
days a week and new games played every 12 minute. Winners will collect
their winning of the on-going Globalot Bingo Sweepstake games either by
crediting their account or being delivered to the member at their option.
Payments for membership will be made by credit card, bank check, debit/ATM
cards and by lec billing or "900" telephone number. The company's URLs are
http://www.abingo.com - http://www.sBid.net - http:/www.sbicom.com -
http://www.globalot.com - http://www.sbicommunications.com -
http://www.forntierpalace.com. The web site is hosted by the company and
fulfillment will be provided by Regency Communications, Inc. The company
will also provide its services to other companies desiring access to the
Internet. The company will generate additional revenues by offering web
page/site design/development, advertising, fulfilment and its web services
to others. This would include equipment and tee access to the Internet.
At the same time, local political influences developed negative local law
changes as a reaction to the Piedmont Jaycees operation. Local ordinances
are being adopted to limit all charity bingo operations and the amount of
employees and establish a requirement of near gross proceeds being donated
for charitable purposes regardless of reasonable and necessary operation
expenses with no revenues to the employees of the charity. At this time
it is not feasible to lease the facility for the operation of bingo.
<PAGE> 9
In reaction to the above political/legal trends, management has negotiated
the sales of the property to a Panama City, Florida group, for the
operation of a mobile home plant and sales outlet.
The Company believes that the $5 billion dollar North America charitable
bingo industry is fragmented and inefficient, yet potentially profitable.
The Company's strategy, therefore, is to consolidate a portion of the
industry to build a national chain of bingo centers in lucrative markets.
The Company believes that its industry experience, economies of scale and
financial resources will provide a competitive advantage over competing
bingo operations, which should enable the Company to effectively execute
its long-term growth plan. The Company currently has no bingo center.
The Company intends to continue its expansion through acquisitions and
developments in other selected markets throughout the United States.
Management's goal is to open other bingo centers by end of 1999.
RESULTS OF OPERATION
SIX MONTHS ENDED JUNE 30, 1999 COMPARED TO SIX MONTHS ENDED JUNE 30, 1998.
The Company generated revenues of $ 593 during its second fiscal quarter
ended June 30, 1999, as compared to $593 in the comparable period of the
prior fiscal year, which represents no change. The Company expects
quarterly revenues to continue to increase upon the successful operation
of the Company's Web site, new leases of the company property in Piedmont
and broadcasting of it's interactive programming.
Direct operating costs of the Company's Piedmont facility totaled $110,802
during the second quarter of 1999 versus $110,802 in the comparable 1998
quarter, which represents no change. Approximately 35% of the current
period's direct operating costs were comprised of depreciation and
amortization, which are relatively fixed expenses. The balance is
primarily comprised of legal, wages and management fee costs.
General & Administrative (G&A) expenses totaled $35,000 during the second
quarter of 1999 as compared to $35,000 in the year ago period. This
expense decrease of $0.00 was mainly due to no operations and renovation
during the first and second quarter of 1999.
The Company did not record any tax expense during the current quarter or
comparable year-ago period due to tax loss carryforwards. The Company's
tax loss carryforward balance at the end of fiscal 1998 was in excess of
$6 million and, as such, the Company does not expect to incur any federal
income tax liability until this carryforward is depleted by operational
profits.
Net loss for the second fiscal quarter of 1999 was $110,209, which equated
to loss per share of ($0.02) Net loss for the comparable quarter of 1998
was $110,802 which equated to loss per share of ($0.02). Virtually all of
the loss was due to no operations in second quarter of 1999. Management
believes that the Company's direct operating costs and G&A expenses are
relatively low for this quarter. As such, management will continue to seek
expansion opportunities that offer incremental operating revenues which, in
turn, favorably leverage the Company's net income performance.
All of the Company's revenue in the past has come from operations of the
bingo hall or interest income on cash therefrom. The following table
summarizes revenue categories in the Company's statement of income
(rounded to the nearest whole dollar).
Amount of Total Revenue
Six Months Ended June 30,
1999 1998
---- ----
Revenues:
Bingo hall rent/administrative fees .00 .00
Kitchen and gift shop revenues .00 .00
Other Income 593 593
---- ----
Total Revenue 593 $593
---- ----
<PAGE> 10
In general, the Company experienced insignificant revenues in 1994 as it
attempted to expand and develop its operations. At the end of 1994 the
Registrant acquired a bingo hall, which it now 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. In late 1996, the Company was also requested to take
over operations of the kitchen and gift shop portions of the facility. Except
for the operation of the bingo hall, there are no other significant revenue
sources of the Company at this time. In 1995, the Company charged a flat
$75,000 per month in rent, plus management fees as deemed appropriate. In
February, 1996, the lease with the current charity was amended to reflect a
minimum payment of $25,000 per month, with adjustments up to $75,000 per
month if the charity generates sufficient annual cash flow to afford to pay
the increased rent. Although the charity generated cash flow that would
allow greater rent, management allow such excess to be applied toward unpaid
rents and did not increase the rent charge for 1997.
Management collected no rent payments and had no revenue for six months ended
June 30, 1999.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1999, the Company had cash and cash equivalents of $485.00, a
decrease of $0.00 from the end of fiscal 1998. The decrease was mainly due
to renovation of the property and not being able to operate the facility. The
Company does expect to make further investments in its Piedmont, Alabama
facility in order to meet customer demands and renovate as required by the
sell for the facility.
The Company intends to finance future acquisitions primarily through the use
of stock and, to a lesser extent, cash and notes.
The Company paid a tax liability owed to the State of Alabama that the
previous owners did not pay. This debt is due the Company and the company
plans to recover these funds by all legal means available to the company.
Current liabilities totaled $1,867,950 at the end of the quarter, but less
than 10% of this total represented trade payables. Approximately 60% of
total liabilities are comprised of a note payable to the Haulmark Company for
a loan the company received in order to pay the previous owners tax liability.
Approximately 20% of long-term note payable on which the Company is currently
making payments. The Company has no other long-term debt. The Company had
total assets of over $7.6 million and total liabilities of $1.9 million at
the end of the second quarter, with shareholder equity of $5.8 million. The
Company believes that its current capital resources, together with expected
positive operational cash flows and note collections, will support operational
requirements for the next year.
<PAGE> 11
PART II--OTHER INFORMATION
ITEM 1. 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 2. CHANGES IN SECURITIES
In July, 1996, 5,000 shares of preferred stock with a par value of $25,000
were to be issued to cover $20,000 in closing costs relating to the mortgage
note receivable. The Company inadvertently issued 25,000 shares rather than
5,000 shares, and both parties agreed that the related certificate would be
returned and reissued. In the first quarter of 1997, the certificate was
returned, and a new certificate for 5,000 shares was issued. In January 1998
the Company issued 25,000 shares of its common stock to cover the cost of
software programing relating to PandaAmerica. The Company also converted
40,000 shares of preferred shares to 200,000 shares of the company common
stock.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
<PAGE> 12
ITEM 5. OTHER INFORMATION
NO CHANGE IN MANAGEMENT.
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.
<PAGE> 13
EXHIBITS AND REPORTS ON FORM 8-K
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS:
EXHIBITS DESCRIPTION
11 Statement re: computation of per share
earnings
27 Financial data schedule
(B) REPORTS ON FORM 8-K:
None
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
SBI Communications, Inc.
Date: August 12, 1999 By: /s/Ronald Foster
-------------------------------------
Ronald Foster Chairman of the
Board and Chief Executive Officer
(principal executive officer)
<PAGE> 14
EXHIBIT 11
SBI COMMUNICATIONS, INC.
COMPUTATION OF EARNINGS PER COMMON SHARE
FOR THE SIX MONTHS ENDED
JUNE 30 , 1997 AND 1998
Six Months Six Months
Ended Ended
June 30, 1998 June 30, 1999
-------------- --------------
Shares outstanding: 5,570,439 5,570,439
Weighted average shares outstanding 5,570,439 5,570,439
Net loss $ (280,209) $ (280,209)
Preferred Dividend -- --
-------------- --------------
Total (280,209) (280,209)
Net loss per share $ (0.05) $ (0.05)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF SBI COMMUNICATIONS, INC. FOR THE QUARTERLY
PERIOD ENDED JUNE 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<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<F1>
<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> (280,630)
<EPS-BASIC> (0.05)
<EPS-DILUTED> (0.05)
<FN>
<F1>Includes: CGS, Admin, Facility, Prod Cost, Depr & Amort.
</FN>
</TABLE>
