<PAGE>
Securities and Exchange Commission
Washington, D.C., 20549
FORM 10-KSB/40/A
Annual Report Pursuant To Sections 13 Or 15 (D) Of The Securities Exchange
Act Of 1934
For the Fiscal Year Ended December 31, 1997
Filed Pursuant To Sections 13 Or 15(D) Of The Securities Exchange Act of 1934
Securities and Exchange Commission File Number O-28416
===============================================================================
SBI Communications, Inc.
(Name of small business issuer specified in its charter)
===============================================================================
<TABLE>
<S> <C>
Delaware 58-1700840
(State or other jurisdiction of (IRS Employer
incorpoation or organization) Identification Number)
incorporation or organization)
1239 South Glendale Avenue, Glendale, California 91205
(Addrsss of Principal executive offices) (Zip code)
(818) 550-6181
(Issuer's telephone number)
</TABLE>
===============================================================================
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: $544,662.00
Aggregate market value of the voting stock held by
non-affiliates as of April 30, 1998: $1,336,360.00
Number of common shares outstanding as of latest
practical date at $.001 par value: 5,345,430
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 April 30, 1998
_______________________________________________________________________________
<PAGE>
<TABLE>
<CAPTION>
Table of Contents
Item Page
Number Number Item Caption
------ ------ ------------
<S> <C> <C>
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 Equity and other Shareholder Matters
Item 6. 22 Management's Discussion and Analysis or Plan of
Operation Executive Compensation
Item 7. 25 Financial Statements and Summary Financial Data
Item 8 33 Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure
Part III
--------
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
----------
<PAGE>
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 two subsidiaries, SBI Communications, Inc., a Nevada
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
<PAGE>
staffing and marketing costs. Management is also confident that the
Company will prosper in the bingo industry based on: i) management's
industry and operational experience; ii) the Company's early entry into the
nationally fragmented bingo market, with no competition on a similar
scale; and iii) the Company's positioning of its bingo centers in
demographically and economically desirable markets, primarily in the
southern part of the U. S.
Business Overview
-----------------
Although state regulations vary, the Company's basic operation is as
follows. The Company identifies and analyzes desirable bingo markets that
offer favorable population and income demographics. After the Company
selects an attractive market for expansion, the Company determines
whether it would be more desirable to build a new bingo center or acquire
an existing center, if one exists. Building and finishing out a new
commercial center, which typically costs $100,000 - $250,000, is often less
expensive than acquiring an existing center and allows the Company to
potentially earn a higher rate of return and accelerated payback on its
investment. Conversely, acquisitions typically cost more than building a
comparable new center, but offer certain advantages over building,
including: i) greater predictability of investment return since the center's
past performance is known, ii) no dilution of the existing bingo market
through the addition of another bingo center, and iii) preservation of the
Company's cash resources (if the acquisition is funded in whole or in part
with seller-financed notes and/or Company stock. The Company will
continue to expand through both developments and acquisitions. The
Company will only pursue acquisitions of desirable halls that offer proven
cash flows and opportunities for enhanced financial performance.
Concurrent with new bingo center development or acquisitions, the
Company will acquire all necessary operating permits and licenses from the
appropriate state or local municipality.
After the company selects a site for development or acquisition and
initiates legal fulfillment activities, the Company then contacts local
charities to promote the Fund-raising possibilities which charity bingo
provides. When selecting charities, the Company considers such factors as;
i) the charitable cause and presence in the local community; ii) the
background of charity officers or trustees; and iii) a charity's financial
stability. Once charity selection is complete, the Company assists the
charities in the development of an operating plan consistent with current
regulations, which may include the creation of a bingo management team
comprise of representatives from the participating charities. The
management team hires and oversees center employees and volunteers, sets
up an accounting system and bank accounts, and hires a center
manager/head cashier who manages the center. Lease agreements between
the Company and the charities are typically structured on an annual basis,
with cancellation options for both parties. The Company believes that
short term leases allow it to limit commitments to under-performing
charities.
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
<PAGE>
building and equipment for bingo sessions at the center. These rental
payments are generally controlled by state or local regulations and typically
place a cap or ceiling on the amount to be realized by the Company per
session (See Item 1 - Government Regulation). The participating charities
keep the net proceeds after payment of rent to the Company and payroll
costs to the bingo center employees. Additional income may also be earned
by the Company through vending and concessions operations, the sale of
bingo paper and supplies at certain of the centers and revenues from video
gaming, where legal.
The thrust of most applicable state or local regulations is to make
participating charities responsible for the direct operation of the bingo
center and employment and payment of personnel. These regulations
generally prohibit management control by the Company, which reduces the
Company's staffing obligations and expenses. In addition, most states
require that participating charities be responsible for all marketing and
advertising activities and expenses. The Company's role as
consultant/service provider does permit it to advise in the selection of key
employees and the formulation and execution of a center's business plan.
The Company normally bears responsibility for all non-personnel and non-
advertising costs of a bingo center, including property rental, finish-out of
the property for bingo operations, bingo supplies, janitorial services,
utilities, maintenance and repairs, security, property taxes, permits and
insurance. The Company must be able to cover these expenses, plus
corporate overhead, from its charity rental payments in order to earn a
profit. However, as a center becomes better established and more
profitable, the Company transfers a portion of these expenses to the
participating charities. The Company's objective is to allow the operation
to run on a "turnkey" basis by the charities to the extent possible.
However, because of the Company's substantial investment in opening a
bingo center and significant continued commitment in funding operating
and overhead costs, the Company must maintain an advisory role with
respect to its bingo center operations. The Company and participating
charities each has a vested stake in making sure that operations are
conducted in a mutually profitable way. The Company's objective is to
ensure maximum proceeds from center operations, which allows charities
to generate substantial funds, and, in turn, allows the Company to earn the
maximum legal rent from leasing its properties to charities.
Current Operations
------------------
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.
<PAGE>
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.
Florida
-------
The Company will be opening a new facility in Fort Lauderdale, Florida.
This facility will open in the third quarter of 1998.
The Company website is located in Coral Gables, Florida.
California
----------
The Company has a bingo program operating over the PandaAmerica
Shopping Network.
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 regula
tory 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 in
creases. 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
<PAGE>
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 legaliza
tion 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 bring
ing charity gaming to states where the Company operates.
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 participat
ing cable and television stations. The Company plans to resume expanded
broadcasts in the near future, when it repairs required telephone switching
equipment.
The use of telephones for game card distribution makes it possible for
home viewers to also participate in the 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.
A broadcast took place on June 15, 1996; however, subsequent broadcasts
have been delayed by a problem with the Company's telephone switching
<PAGE>
equipment, which should be resolved in the near future. Future plans
include expanding the game to other week nights. The game was broadcast
over PandaAmerica Network in the past and daily broadcasts resumed
during the forth quarter of 1997. The Company intends to broadcast a
Million Dollar Globalot game each Saturday evening at 11:00 p.m. (eastern
time).
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 audi
ence, Globalot Bingo developed a special Million Dollar Globalot game,
designed to air each Saturday evening at 11:00 p.m. (eastern time). A
broadcast took place on June 15, 1996; however, subsequent broadcasts
have been delayed by a problem with the Company's telephone switching
equipment, which should be resolved in the near future.
When broadcasts resume, the game will pay the first person who attains
Bingo each broadcast night an advertised cash prize. The prizes will
involve a chance to win $1,000,000 by being the first participant to cover
the correct 8 numbers in 16 calls (the term call referring to the first 16
numbers selected in the game) or less (the "Quick Pick 8" game) or,
guaranteed second prizes of $25,000. If there is no winner in the
$1,000,000 game, the 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.
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.
<PAGE>
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.
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.
<PAGE>
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.frontierpalace.com,
http://www.bingonut.com and http://www.bingo2k.com. Shopping, travel,
bingo games and other items will be available for the consumer mid-1998.
A-bingo 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.
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.
<PAGE>
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.
The data highway and its ability to reach millions of consumers is
providing unprecedented opportunities for manufacturers and marketers of
products and services. These companies are being challenged to find ways
to use advanced technology, like interactive technology, to make it easy for
consumers to find out about and purchase their products and services.
Popular examples of interactive technology in the consumer market include
on-line computer services (like Prodigy and CompuServe), voice automated
telephone services (like consumer banking and financial services), and
at-home television shopping services (like the Home Shopping Network).
The success of these have convinced management that interactive television
programming like that being offered will be well received by a public that
continues to accept more and more interactive technology into their daily
lives.
<PAGE>
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 $18.00 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.
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.
<PAGE>
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.
3. Dependence on One or a Few Major Customers
The Company's current operations are highly reliant on local charities. Its
former broadcast operations and contemplated future operations are not
expected to be reliant on any single or small group of customers.
Employees
---------
As of December 31, 1997, the Company had 3 permanent employees.
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
<PAGE>
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.
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. 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
<PAGE>
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.
Item 3 - Legal Proceedings
--------------------------
Involvement in Certain Legal Proceedings
----------------------------------------
To the best knowledge and belief of the Company, during the past five
years, no present or former director, executive officer or person nominated
as a director or appointed as an executive officer of the Company or any of
its affiliated subsidiaries, has been involved in:
(1) Any bankruptcy petition by or against any business of
which such person was a general partner or executive
either at the time of the bankruptcy or within two years
prior to that time;
<PAGE>
(2) Any conviction in criminal proceeding or subject to a
pending criminal proceeding (excluding traffic
violations and other minor offenses);
(3) Being subject to any order, judgment or decree, not
subsequently reversed, suspended or vacated, of any
court of competent jurisdiction, permanently or
temporarily, barring, suspending, or otherwise limiting
his involvement in any type of business, securities or
banking activities; and
(4) Being found by any court of competent jurisdiction (in
a civil action), the Commission or the Commodities
Futures Trading Commission to have violated a federal
or state securities or commodities law, and the
judgment has not been reversed, suspended or vacated.
Item 4 - Submission of Matters to a Vote of Security Holders
------------------------------------------------------------
There were no matters submitted to a vote of security holders during the
fourth quarter of fiscal 1997. The Company's annual shareholder meeting
with voting on proxy issues is on April 28, 1999.
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.
Market for Common Equity
------------------------
The Company's stock is traded on the NASDAQ OTC Electronic Bulletin
Board. The Company currently has 5,345,439 shares of stock outstanding,
with 1,450,000 in the public float. There are approximately 3,368
shareholders of record. For the fiscal year ended December 31st, 1997 the
Company reported revenues of $544,662.00 and a net loss of
($3,609,312.).
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.
<PAGE>
No common equity is subject to options or warrants to purchase
or securities convertible into common stock, except for the
currently issued 168,000 shares of preferred stock which are
convertible into common stock. The Company is in the process
of re-purchasing 1,500,000 of preferred shares from the
previous owner of 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 5,345,439 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.
</TABLE>
<TABLE>
<CAPTION>
Common Stock
Date Low High
---- --- ----
<S> <C> <C>
Fiscal 1996 $ 0.62 $1.37
Fiscal 1997
First Quarter $0.25 $0.50
Second Quarter $0.1875 $0.375
Third Quarter $0.125 $0.25
Fourth Quarter $0.1875 $0.375
-------
</TABLE>
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
<PAGE>
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.
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).
<PAGE>
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).
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).
<PAGE>
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.
Whether the issuer is domestic or foreign, in all cases a broker or dealer
must review the financial statements and have a reasonable basis for
believing that they were accurate as of the date they were made (Rule
3a51-1(g)(3). In most cases a broker-dealer need not inquire about or
independently verify information contained in the statements. (Release No.
30608, Part III.A.4). Brokers and dealers must keep copies of the domestic
or foreign issuer's financial statements for at least three years following
the date of the related transaction (Rule 3a51-1(g)(4).
Security Holders
----------------
As of December 31, 1997, the latest practicable date for which information
is available, the Company's management was of the opinion that the
Company had approximately 3,368 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.
<PAGE>
As of December 31, 1997, 5,345,439 shares of Common Stock were
outstanding (excluding the 2,500,000 shares held but not yet allocated by
the Company's Employees' Trust) and held of record by approximately
3,368 persons. In addition, 1,668,000 shares of preferred stock were
outstanding, and held by approximately five persons. The Company plans
to repurchase 1,500,000 preferred shares.
Corporate Stock Transfer, 3200 Cherry Creek Drive, Suite 430, Denver
Colorado 80209, acts as transfer agent and registrar for the
Company's common and preferred stock.
Item 6. Management's Discussion and Analysis of Financial
-------------------------------------------------------------
Condition and Results of Operations and Plan of Operation.
----------------------------------------------------------
Introduction
------------
The 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 operating income thru 12/31/97 was 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.
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:
<PAGE>
Frontier Palace
---------------
Because the Piedmont Jaycees did not perform as represented, and their
management did not develop business, gross revenues were 50% of their
projections, and 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 end of 1997.
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 .
In reaction to the above political/legal trends, management entered into a
sales agreement for its Piedomt property.
Intenet Web Site
----------------
The company established a secure web site allowing individuals to join "A
Bingo 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 web site is hosted by a Coral
Gables educational organizations. Fulfillment of the operation is by sites
and organizations in Fort Lauderdale, Florida. The company will at some
point host its own web site with server and tee access to the Internet. The
company will generate additional revenues by offering advertising and its
web services to others.
Liquidity
---------
The following table summarizes working capital and total assets:
<TABLE>
<CAPTION>
Fiscal Year Ended December 31,
1997 1996
---- -----
<S> <C> <C>
Working Capital $ 3,170,000 ($ 290,023)
Total Assets $ 4,069,124 $ 7,441,024
</TABLE>
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 fees collected from
charities that sponsor bingo games at the Company's bingo hall.
<PAGE>
At December 31, 1996, 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 recogntion of the pending
sale of the Piedmont property. 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. 1997
was a relatively dormant year. Shareholders were repaid was repaid $90,000
in the year ended 1997. To fund these cash flow needs, the Company was
able to obtain $145,000 in proceeds from a loan to an affiliate, combined,
this resulted in a net decrease in cash for the year of $20,009.
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.
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).
<TABLE>
<CAPTION>
Amount of Total Revenue
Fiscal Year Ended December 31,
1997 1996
---- ----
<S> <C> <C>
Revenues:
Licenses & Royalties -0- -0-
Bingo Hall Operations $ 411,033 $352,000
Kitchen and gift shop revenues 131,703 67,019
Other Income 1,926 2,109
Total Revenue $ 544,662 $421,128
</TABLE>
<PAGE>
In general, the Company experienced insignificant revenues in 1997 as it
attempted to expand and develop its operations. Total revenues were
$544,662 for 1997. 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 $352,000 in 1996, but have grown to
$411,033 for the calendar year ended December 31, 1997. Total revenues
for calendar year ended December 31, 1997 were $544,662. Accordingly,
except for the operation of the bingo hall, there are no other significant
revenue sources of the Company at this time. For 1996 and 1997, 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:
<TABLE>
<CAPTION>
Amount of Total Expenses
Fiscal Year Ended December 31,
1997 1996
---- ----
<S> <C> <C>
Salaries and related expenses $ 157,649 $ 170,822
Other general and administrative expenses $ 358,670 $ 488,545
Depreciation and amortization $ 346,742 $ 544,752
Interest expenses and finance charges $ 82,637 $ 76,202
</TABLE>
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.
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.
<PAGE>
Item 7. Financial Statement and Summary Financial Data
----------------------------------------------------------
Financial Statements
--------------------
The audited consolidated balance sheet of the Company for its years ended
December 31, 1997 and 1996 and the related consolidated statements of
operations, stockholder's equity and cash flows are submitted herewith.
Index to Financial Statements
-----------------------------
The audited consolidated balance sheet of the Company for its years ended
December 31, 1997 and 1996 and related consolidated statements of
income (loss), stockholder's equity and cash flows therefor, follow. The
page numbers for the financial statement categories are as follows:
Page Description
__ Report of Certified Public Accountants, as to the calendar years
ended December 31, 1997 and 1996.
__ Consolidated Balance Sheets - December 31, 1997 and December
31, 1996.
__ Consolidated Statement of Income (Loss) for the calendar years
ended December 31, 1997 and December 31, 1996 and from
inception until December 31, 1997.
__ Consolidated Statement of Changes in Stockholder's Equity from
Inception (January 10, 1986) through December 31, 1997.
__ Consolidated Cash Flows for the calendar years ended December 31,
1996 and December 31, 1997 and from inception until December 31,
1997.
__ Notes to Consolidated Financial Statement Statements for the
calendar years ended December 31, 1997 and December 31, 1996.
To the Board of Directors
SBI Communications, Inc.:
We have audited the accompanying consolidated balance sheet of SBI
Communications, Inc. and subsidiaries (the "Company") as of December
31, 1997, and the related consolidated statements of operations,
stockholders' equity and cash flows for year ended December 31, 1997.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about weather the financial statements are
free from material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provided
a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of the Company
as of December 31, 1997, and the consolidated results of its operations and its
cash flows for the year ended December 31, 1997, in conformity with generally
accepted accounting principles.
<PAGE>
The accompanying financial statements have assumed that the
Company will continue as a going concern. As shown in the accompanying
financial statements, the Company has a $2.8 million provision for net
realizable value regarding the cost basis of building and equipment as of
January 1, 1998. As more specifically indicated in Note 1 to the financial
statements, the Company's existence is dependent on the successful closing
of this property held for sale and has no established commercial product or
marketing channels at this time to generate future revenues. These factors
raise a substantial doubt about the ability of the Company to continue as a
going concern. Management's plans in regards to those matters are also
described in Notes 1 and 8. The financial statements do not include any
adjustments that might result form the outcome of this uncertainty.
/s/ Jay J. Shapiro
JAY J. SHAPIRO, C.P.A.
a professional corporation
Encino, California
July 1, 2000
<PAGE>
REPORT OF INDEPENDENT CERFIFIED PULBIC ACCOUNTANTS
--------------------------------------------------
To the Board of Directors and Stockholders of SBI Communications, Inc.
We have audited the accompanying consolidated balance sheet of SBI
Communications, Inc. and Subsidiary as of December 31, 1996, and the related
consolidated statements of loss, changes in stockholders' equity and of
cash flows for the year then ended. These consolidated financial statements
are the responsiblity of the Company's management. Our responsibility is
to express as opinion on these consolidated financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. These standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management,
as well as evaluating the overall consolidated financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.
In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the financial position of
SBI Communications, Inc. and Subsidiary, as of December 31, 1996, and the
results of its operations and its cash flows for the year then ended,
in conformity with generally accepted accounting principles.
/s/ Daniel, Ratliff & Company
-----------------------------
Daniel, Ratliff & Company
March 24, 1997
Charlotte, North Carolina
<PAGE>
SBI COMMUNICATIONS, INC. AND SUBSIDIARY
-----------------------------------------
CONSOLIDATED FINANCIAL STATEMENTS
---------------------------------
DECEMBER 31, 1997 AND 1996
--------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
DECEMBER 31,
------------
1997 1996
----- -----
ASSETS
------
<TABLE>
<CAPTION>
Current assets:
---------------
<S> <C> <C>
Cash $ 22,228 $ 42,327
Accounts receivable, net of allowance
for doubtful accounts of $-0- at
December 31, 1997 and 1996 (Note 8) 250 120,306
Accounts and notes receivable from
affiliates (Note 2) 9,617 3,600
Inventories 40,000 24,391
-------- -------
72,095 190,624
Property and equipment, net of accumulated
depreciation and reserve for net realizable value
(Note 3 and note 8) 3,945,920 7,026,112
Other assets:
-------------
Accounts receivable - long-term, doubtful
accounts of at December 31, 1996 - 100,000
Organization costs, trademarks, shows, computer
programs and game inventory, net (Note 4) - -
Deferred loan costs 21,109 56,200
Deposits 30,000 68,088
-------- ------
$4,069,124 $7,441,024
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<TABLE>
<CAPTION>
Current liabilities:
--------------------
<S> <C> <C>
Note payable to trust managed by a
shareholder (Note 2) $ 150,000 $ 200,000
Mortgage note payable-current
portion (Note 5) 239,701 5,873
Capitalized leases-current portion (Note 5) 17,491 -
Accrued wages due to principal
shareholder (Note 2) 290,000 180,000
Advances due to principal
shareholder (Note 2) - 14,901
Account payable and accrued expenses 150,442 83,873
--------- --------
847,634 484,647
Mortgage payable, long-term portion (Note 5) - 240,229
Capitalized leases, long-term portion (Note 5) 62,216 -
Other notes payable (Note 5) 52,438 -
--------- ----------
Total liabilities 962,288 724,876
Stockholders' equity (Note 6):
Preferred stock, par value $5.00; 10,000,000
shares authorized; 1,673,000 and 1,693,000
shares issued and outstanding at December
31, 1997 and 1996, respectively 8,365,000 8,465,000
Common stock, par value $.001; 40,000,000
shares authorized; 5,345,439 shares issued
and outstanding at December 31, 1997 and 1996 5,345 5,345
Paid in capital 3,567,343 3,467,343
Accumulated deficit ( 8,830,852) ( 5,221,540)
-------------- --------------
3,106,836 6,716,148
-------------- --------------
$ 4,069,124 $ 7,441,024
============== ===============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
SBI COMMUNICATIONS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF LOSS
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
<S> <C> <C>
1997 1996
Revenues (Note 8):
Bingo hall rent $ 411,033 $ 352,000
Kitchen and gift shop revenues 131,703 67,019
Administrative fees - -
Other income 1,926 2,109
________ ________
544,662 421,128
Expenses:
Cost of sales - kitchen and gift shop 180,563 37,892
Salaries and related expenses 157,649 170,822
Facility costs 49,518 80,605
General and administrative 434,986 488,545
Travel and production costs 102,762 72,029
Depreciation and amortization 306,742 544,752
Interest and finance expenses 82,637 76,202
---------- ---------
1,314,857 1,470,847
---------- ---------
Net loss from operations ( 770,195) ( 1,049,719)
Provision - Net realizable value ( 2,839,117)
_____________________________
Net loss ($ 3,609,312) ($1,049,719)
============= =============
Net loss per share (Note 7) ($ 0.66) ($ 0.20)
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
SBI COMMUNICATIONS, INC. AND SUBSIDIARY
---------------------------------------
CONSOLIDATED STATEMENTS OF CHANGES IN
-------------------------------------
SHAREHOLDERS' EQUITY
--------------------
FOR THE YEARS ENDING DECEMBER 31, 1996 AND 1997
-----------------------------------------------
<TABLE>
<CAPTION>
<C> <C> <C> <C> <C> <C> <C> <C>
Common Stock Preferred Stock Additional Total
------------ --------------- ---------- -----
Number Number Paid-in Accumulated Shareholder's
of shares Amount of shares Amount Capital Deficit Equity
--------- ------ --------- ------ ------- ------- ------
Balance
December
31,
1995 5,345,439 5,345 1,668,000 8,340,000 3,572,343 ( 4,171,821) 7,745,867
Preferred
stock issued
in July, 1996
to cover
$20,000 in
loan closing
costs, 20,000
shares to be
returned
in 1997 - - 25,000 125,000 (105,000) - 20,000
Net loss,
January 1,
1996 to
December
31, 1996 - - - - - (1,049,719)(1,049,719)
Balance
December
---------------------------------------------------------------------
31, 1996 5,345,439 5,345 1,693,000 8,465,000 3,467,343 (5,221,540) 6,716,148
Excess
preferred
stock issued
in July,
1996 to
cover
$20,000
in loan
closing costs,
20,000 shares
were returned
in 1997 - - (20,000) (100,000) 100,000 - -
Net loss,
January 1,
1997 to
December 31,
1997 - - - - - (3,609,312) (3,609,312)
---------------------------------------------------------------------
Balance
December
31, 1997 5,345,439 5,345 1,673,000 8,365,000 3,567,343 (8,830,852) 3,106,836
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
SBI COMMUNICATIONS, INC. AND SUBSIDIARY
---------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
FOR THE YEAR ENDED DECEMBER 31,
-------------------------------
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net (loss) ( $3,609,312) ($1,049,719)
Adjustments to reconcile net loss to cash
provided (used) by operating activities:
Provision for net realizable value 2,839,117
Depreciation and amortization 341,833 569,552
Services paid through reduction in amounts
receivable from affiliates - 25,000
Change in accounts receivable, trade 128,234 279,558
Change in inventories 15,609 36,297
Change in accounts payable
and accrued expenses 210,984 84,406
---------- ------------
Cash (used) by operating activities ( 73,535) ( 54,906)
----------- -------------
Cash flows from investing activities:
Purchase of property and equipment -0- ( 51,603)
Decrease (increase) in deposits 38,808 ( 5,000)
Loans to affiliates ( 6,017) ( 3,600)
----------- -----------
Cash (used) by investing activities 32,791 ( 60,203)
----------- -----------
Cash flows from financing activities:
Loans received from (repaid to) affiliates - 10,745
Repayments of affiliated loans ( 14,901) ( 50,000)
Borrowings on new loans and capital leases 145,000 250,000
Repayments on loans and capital leases ( 69,256) ( 3,898)
Deferred loan costs paid - ( 61,000)
--------- ---------
Cash flows provided by financing activities 60,843 145,847
--------- ---------
Net increase (decrease) in cash ( 20,009) 30,738
Cash at beginning of year 42,327 11,589
--------- ----------
Cash at end of year $ 22,228 $ 42,327
========= ==========
Supplemental information:
Income taxes paid $ - $ -
========= =========
Interest paid $ 41,144 $ 50,241
========= =========
</TABLE>
Non-cash activities:
--------------------
<PAGE>
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.
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 finan
cial statements.
Organization and operations
---------------------------
SBI Communications, Inc. (the "Company"), was originally orga
nized in the State of Utah on September 23, 1983, under the
corporate name of Alpine Survival Products, Inc. Its name was
subsequently changed to Justin Land and Development, Inc. during
October, 1984, and then to Supermin, Inc. on November 20, 1985.
On September 29, 1986, Satellite Bingo, Inc. was the surviving
corporate entity in a statutory merger with Supermin, Inc., a Utah
corporation. In connection with the above merger, the former
shareholders of Satellite Bingo, Inc. acquired control of the
merged entity and changed the corporate name to Satellite Bingo,
Inc. Through shareholder approval dated March 10, 1988, the
name was changed to its current name of SBI Communications,
Inc. On January 1, 1993, the Company executed a plan of merger
that effectively changed the Company's state of domicile from
Utah to Delaware. Although the Company is currently a Delaware
corporation, on January 31, 1997, the stockholders and Board of
Directors approved a plan to change the Company's corporate
domicile to the State of Nevada. Management anticipates
executing the plan during 1998.
The Company plans to lease or operate bingo halls and to provide
interactive satellite cable bingo game shows and other similar
telecommunication gaming products or services to television
viewers throughout the United States. During 1997, the
Company's only operations were the leasing of a bingo hall located
in Piedmont, Alabama, and the operation of the kitchen facilities
therein. Under local ordinances, the hall must be leased to a
charity, which was the local Jaycees. As described in Note 8, the
Company is being forced to sell its facility and has ceased bingo
operations in Piedmont, Alabama. A sale is pending as of June 30, 2000
for $3,940,000.00 and a net realizable value provision of $2,839,117
is recognized as of 12/31/97. The Comapny plans to comtinuetto search
for avenues to provide bingo over the Internet, as well as to explore
other revenue producing ventures.
Principles of consolidation
---------------------------
The consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiary, SBI Communications,
Inc. (an Alabama corporation). Intercompany transactions and
balances have been eliminated in consolidation.
<PAGE>
Estimates and assumptions
-------------------------
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reporting amount
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Property and equipment
----------------------
Property and equipment are stated at cost. A net relizable value
reserve of $2.8 million was established on the Piedmont property
due to a pending sale subsequent to 12/31/97. 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.
<PAGE>
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. As of 12/31/97,
the peadmont property ceased operations (see note 8).
Statements of cash flows
------------------------
For the purposes of the statements of cash flows, the Company
considers cash and highly liquid investments purchased with a
remaining maturity of three months or less at the date of purchase
to be cash equivalents.
Note 2 - Related party transactions
-----------------------------------
From time to time, the Company's principal shareholder advances money to
the Company for operations. All amounts owed to the shareholder are non-
interest bearing advances. As of December 31, 1995, the Company owed
$4,156 to this shareholder. During 1996, the Company borrowed (on a net
basis) an additional $10,745 from this shareholder. During 1997, the
Company repaid all amounts advanced, plus further advanced to the
shareholder $9,617. The Company owed this shareholder $14,901 at
December 31, 1996, and had $9,617 receivable from this shareholder at
December 31, 1997. In addition to advances, the Company accrued salaries
payable to the Company's principal shareholder totaling $110,000 and
$60,000 for the years ended December 31, 1997 and 1996, respectively.
All amounts owed to the shareholder are payable on demand.
In October, 1995, the Company borrowed $250,000 from a trust managed
by a shareholder, in the form of a mortgage note. The note was payable in
full on October 15, 1996, with interest payable quarterly at prime plus 3%,
secured by all corporate property up to $1,000,000 in value. $50,000 of
this note was repaid in 1996 when due, and an additional $50,000 was
repaid during 1997. The holder had the right to convert the mortgage note
to common stock at a price of $3 per share. This conversion privilege
expired on July 15, 1996. The note has been extended on a quarter to
quarter basis, with $150,000 remaining outstanding at December 31, 1997.
Interest expense related to this note totaled approximately $20,000 and
$27,000 for the years ended December 31, 1997 and 1996, respectively.
In October, 1995, the Company advanced $25,000 to a shareholder to be
repaid upon demand with interest at prevailing market rates. This
shareholder also provides services to the Company relating to acquisition
candidates and capital sources. The above note was applied as payment for
such services in 1996. An additional $11,700 was paid to this shareholder
during 1996 for the services described. In 1996, the Company loaned
$3,600 to a relative of a shareholder. This loan is non-interest bearing and
is due upon demand.
<PAGE>
Note 3 - Property and equipment
-------------------------------
Property and equipment are summarized as follows at December 31:
----------------------------------------------------------------
Estimated
Useful Life
-----------
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Land(see Note 8) $ 250,000 $ 250,000
Building (see Note 8) $ 3,684,000 6,257,100
Vehicles 5 years 10,920 10,920
Furniture and equipment 5 to 7 years -0- 1,074,798
------------ ----------
3,950,920 7,586,818
Less accumulated
depreciation ( 5,000) ( 560,706)
------------ ----------
$3,945,920 $7,026,112
============ ==========
</TABLE>
Depreciation expense totaled approximately $5,000 and $279,000 for the
years ended December 31, 1997 and 1996, respectively. As 12/31/97 a net
realizable value reserve of $2,839,117 was recognized.
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:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
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
---------- ----------
$ - $ -
========== ===========
</TABLE>
<PAGE>
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 balance on
this note was $239,701 at December 31, 1997. Due to events as described
at Note 8, the entire balance of the note has been classified as current.
The note includes pre-payment penalties ranging from 4% to 6% depending
upon the timing of the pre-payment.
In connection with the above note, the lending company was granted
options to purchase 250,000 shares of common stock for $0.50 per share.
These options expire upon repayment of the loan. In addition, the
Company agreed to issue 5,000 shares of preferred stock to the lender to
cover $20,000 in loan closing costs. Upon issuance, the Company
inadvertently issued 25,000 shares instead of $25,000 in value of preferred
stock to the lender. Such shares were outstanding at December 31, 1996.
In March, 1997, the lender returned the certificate for the 25,000 shares to
the Company, and a new certificate for 5,000 shares will be issued. The
Company has recorded all 25,000 shares as outstanding at December 31,
1996, and reduced paid-in capital for the value of the extra 20,000 shares.
The adjustment to paid-in capital has been reversed in 1997 with the
issuing of the new certificate.
Note 6 - Common and preferred stock activity
--------------------------------------------
The Delaware corporation is authorized to issue up to 40,000,000 shares of
common stock with a par value of $.001 per share, and 10,000,000 shares
of preferred stock with a par value of $5.00 per share. The preferred stock
may be issued from time to time in one or more series, the shares of each
series to have such voting powers, dividend rates, designations,
preferences, and other characteristics as adopted 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.
<PAGE>
Over the history of the Company, there have been a number of non-cash
transactions involving the issuance of common stock of the Company (with
related as well as unrelated parties) recorded based on the estimated fair
value of the consideration received (the asset received or debt retired)
regardless of the number of common shares issued in such transactions in
that it is the opinion of management that the Company's common stock did
not have a readily determinable market value at the time of the
transactions.
The Board of Directors have approved fourteen (14) classes of preferred
stock in total. No shares have been issued relating to any Series other than
Series A as described above. Series A through G of preferred stock have a
liquidation preference of $5.00 per share, pay no dividends, and are
convertible to common stock upon demand at the following conversion
rates:
Series A Sufficient number of shares of common stock worth an amount
equal to the par value of the preferred stock based upon the
market value of the common stock at the date of conversion.
Series B 5 shares common for 1 share preferred
Series C 1 share common for 1 share preferred
Series D 2 shares common for 1 share preferred
Series E 3 shares common for 1 share preferred
Series F 4 shares common for 1 share preferred
Series G 10 shares common for 1 share preferred
Series H through N
of preferred stock have a liquidation preference of
$5.00 per share, pay dividends at a rate not to exceed twelve
percent (12%) annually, and are convertible to common stock upon
demand at the following conversion rates:
Series H Sufficient number of shares of common stock worth an amount
equal to the par value of the preferred stock based upon the
market value of the common stock at the date of conversion.
Series I 5 shares common for 1 share preferred
Series J 1 share common for 1 share preferred
Series K 2 shares common for 1 share preferred
Series L 3 shares common for 1 share preferred
Series M 4 shares common for 1 share preferred
Series N 10 shares common for 1 share preferred
The Company's income (loss) per share was calculated using 5,345,439
weighted average shares outstanding for each of the years ended December
31, 1997 and 1996, respectively. Although convertible preferred stock is a
common stock equivalent, with a conversion rate of approximately 10
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.
<PAGE>
Note 7 - Income taxes
---------------------
Deferred income tax assets and liabilities are summarized as follows at
December 31:
<TABLE>
<CAPTION>
1997 1996
----- ----
<S> <C> <C>
Deferred tax assets
attributable to operating
loss carry forwards $1,500,000 $1,740,000
Valuation allowance due to
uncertainty surrounding
realization of operating
loss carry forwards ( 1,500,000) ( $1,740,000)
Deferred tax liabilities - -
------------ -------------
Total deferred taxes $ - $ -
============ =============
</TABLE>
The Company has available at December 31, 1997, unused operating loss
carry forwards, which may be applied against future taxable income, that
expire as follows:
<TABLE>
<CAPTION>
Amount of Unused Operating Expiration During
Loss Carry forwards Year Ended December 31,
------------------- -----------------------
<S> <C> <C>
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
800,000 2012
-----------
$5,900,000
==========
</TABLE>
<PAGE>
Note 8 - Commitments, risks and contingencies
---------------------------------------------
The Company leased to various charities a bingo hall in Piedmont,
Alabama during 1997. There were no revenues subsequent to 12/31/97.
As of June 30, 2000 a sale of the vacant property is pending at $3,940,000.
Accordingly a net realizable value provision of $2,839,117 was
recognizable as of 12/31/97.
The Company is in the process of developing bingo productions to be
broadcast by satellite and via the Internet into homes of viewers throughout
the United States. Should local, state, or federal laws change regarding
bingo, such changes could have a material impact on the ability of the
Company to generate future revenues.
The Company has a history of issuing common stock for services difficult
to value or yet to be provided. Approximately 3,000,000 (or 57%) of the
common stock outstanding at December 31, 1997, is restricted in some
fashion as a result of the above transactions. Furthermore, the Company
has in prior years canceled common stock certificates due to non-
performance of the third parties involved in certain of the above
transactions. Although no party to such transactions has yet instigated
litigation involving the Company for cancellation or restriction of related
shares, due to the volume of such transactions, litigation relating to such
activity remains a possibility. Management feels all actions it has taken to
cancel or restrict common stock are with merit, and does not anticipate any
material loss being incurred by the Company relating to future resolution of
these matters.
The Company has an employment agreement with Mr. Ron Foster,
shareholder and president, which expires on December 31, 2001. Under
the agreement, Mr. Foster is entitled to $130,000 in minimum annual
salary, cash bonuses of the lesser of 10% of revenues or 5% of pre-tax
profits, and stock bonuses equivalent to 10% of pre-tax profits before
depreciation. To date, Mr. Foster has accepted no more than $120,000 per
year as adequate compensation under the contract. There is no guarantee
that Mr. Foster will continue to accept an amount less than that stipulated
in the agreement.
<PAGE>
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.
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.
<PAGE>
<TABLE>
<CAPTION>
December 31, 1997 December 31, 1996
----------------- ------------------
<S> <C> <C>
Statement of Operations Data
Gross Revenues 544,662 421,128
Income from Operations(Loss) (3,609,312) ( 1,049,719)
Net Income (Loss) per share * ( .66) ( .20)
</TABLE>
Balance Sheet Data
------------------
Assets
-------
<TABLE>
<CAPTION>
<S> <C> <C>
Current Assets 123,204 190,624
Property & equipment, less
accumulated depreciation 3,945,920 7,026,112
Other Assets -0- 224,288
----------- -----------
Total Assets 4,069,124 7,441,024
Liabilities
Current Liabilities 847,634 484,647
Long Term Liabilities Nil 240,229
Total Liabilities 962,288 724,876
Total Stockholders' Equity 3,106,836 6,716,148
----------- ------------
Total Liabilities and Equity $ 4,069,124 $ 7,441,024
============== ============
</TABLE>
______
* See above. Per share data is computed based on the weighted average
of common stock outstanding as of the report date.
<PAGE>
Item 8. Changes in and Disagreements with Accountants on
--------------------------------------------------------
Accounting and Financial Disclosure
------------------------------------
The Company changes accounting firm. There are no dicagreements with the
former accounting firm. The accounting/auditing firm Jay J Shapiro, CPA, PA
will represent the company.
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.
<TABLE>
<CAPTION>
Name Age Position Since
<S> <C> <C> <C>
Ronald Foster 56 President/Chairman of the Board 1986
William Beggs 54 Director 1998
Karien Anderson 47 Secretary/Treasurer/Director 1997
Claude Pichard 43 Director 1986
Mel Ray 58 Director 1997
</TABLE>
______
Messrs. Fosters, 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, 56, 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,
<PAGE>
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. 1987 to 1989, Mr. Foster
served as president and director of Ed-Phills, Inc., a Nevada corporation
and is now an executive vice president and member of the board of
directors of Golden American Network, a California corporation. Since
1984, he has also been the president and chief executive officer of ROPA
Communications, Inc., which owns and operates WTAU-TV-19 in Albany,
Georgia. He created and produced "Stock Outlook 87, 88, and 89," a video
presentation of public companies through Financial News Network (FNN),
a national cable network. Mr. Foster also has experience as technical
director and associate producer for numerous national live sports
broadcasts produced by ABC, CBS and WTBS. Mr. Foster is
Driector/Producer/Writer of the Company Interactive Broadcast Programs.
Karien Anderson
---------------
Ms. Anderson is 47 years old and resides in Piedmont, Alabama. Ms.
Anderson has extensive experience in executive secretarial business,
including government and private sectors. She has extensive background
in the field of advertising, marketing, special event promotions, contract
management, personnel management and real estate. Ms. Anderson
currently holds a real estate licence. Ms. Anderson has been involve as
coordinator for non-profit association for the last eighteen years. She is
currently employed as Secretary and property manager for SBI
Communications, Inc.
Claude Pichard
---------------
Mr. Pichard, 44, has been a Vice President and a director for the 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 58 years old and resides in Tampa, Florida. Mr. Ray has been
an executive in the bottled and natural gas industries for more than 30
years, and currently manages six gas companies in the state of Florida,
ranging from the west coast Tampa area all the way to the east coast of
Florida. Mr. Ray's extensive experience in utility companies gives him a
great understanding of local and federal government regulations. Due to
the nature of his business, Mr. Ray also possesses knowledge concerning
hazardous materials transportation, bulk purchasing, retail sales,
management, marketing, acquisition, and personnel. Mr. Ray has 20 years
of experience operating some of the most profitable 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.
<PAGE>
William Beggs
-------------
Mr. Beggs is 54 years old and resides in Fort Lauderdale, Florida. Mr.
Beggs has been a member, in good standing, of The Florida Bar since
1973. Mr. Beggs practices real estate and corporate law in the Fort
Lauderdale area.
Item 10 Executive Compensation
----------------------------------
The Summary Compensation Table below sets forth all compensation paid
to the Officers and Directors of the Company during the Company's
year ended December 31, 1996 and 1997.
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.
1996 Summary Compensation
---------------------------
<TABLE>
<CAPTION>
Name Annual Compensation Long Term Compensation
and Awards Awards LTIP All
Principal Restricted Restricted Pay- Other
Position Salary Bonus Other Stock Options outs Compensation
<S> <C> <C> <C> <C> <C> <C> <C>
Ronald Foster ** 5 * * * * * *
Claude Pichard + * * * * * *
Mel Ray (2) * * * * * * *
Thomas Barrett(4) 7 * * * * * *
</TABLE>
1997 Summary Compensation Table
--------------------------------
<TABLE>
<CAPTION>
Name Annual Compensation Long Term Compensation
and Awards Awards LTI All
Principal Restricted Restricted Pay- Other
Position Salary Bonus Other Stock Options outs Compensation
<S> <C> <C> <C> <C> <C> <C> <C>
Ronald Foster ** (5)* * * * * *
Claude Pichard + * * * * * *
Mel Ray (2) * * * * * * *
Karien Anderson(1)(6) * * * * *
Thomas Barrett(4) (8) * * * * *
</TABLE>
______________
* None.
** 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.
<PAGE>
(6) $ 30,000.
(7) $ 1,500.
(8) $ 30,000.
(9) No person listed has any options to acquire securities of the kind
required to be disclosed pursuant to instruction 1 of Item 403 of
Regulation SB.
Employment Agreements
----------------------
The 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.
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
<PAGE>
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).
<TABLE>
<CAPTION>
Name and Address of Amount of Nature of Percent of
Beneficial Owner * Shares Ownership Class
---------------- --------- ----------- ---------
<S> <C> <C> <C>
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, W Virginia 24701
</TABLE>
_____
* 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.
<TABLE>
<CAPTION>
Title of Name of Amount Nature of Percent of
Class Beneficial Owner Shares Ownerership Class
-------- ----------------- -------- ------------- ----------
<S> <C> <C> <C> <C>
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%
</TABLE>
____
* 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.
<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
------ -------------- ------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
2. .1 *** Plan of Reorganization: Agreement
and Plan of Merger [sic] by and
among Satellite Bingo, Inc., a
Georgia corporation, and Supermin,
Inc. dated September 2, 1986.
.2 *** Re-incorporation in Delaware
Instruments.
3. Constituent Documents:
-----------------------
.1 *** Articles of Incorporation, as
amended
.2 *** Bylaws, as amended
10. Material Contracts:
------------------
.1 *** Agreements for Purchase of
Piedmont Bingo Hall (Frontier
Palace).
.2 *** Employment Agreement between
Company and Ronald Foster.
.3 Joint Venture Agreements:
*** .1 Joint Venture Agreement with
VPACS Limited (a New York
corporation)
*** .2 Cahill Agreement
*** .3 La Yate Company Limited (Hong Kong)
*** .4 PandaAmerica/Glendale Studios
.4 Bingo Hall Agreements:
------------------------
*** .1 Chief Strikeaxe Trading Post
(Oklahoma)
*** .2 DCA Services Division, Fort
Benning, Georgia
.5 *** Lease and Service Provider
Agreements with Piedmont Jaycees.
<PAGE>
.6 Program & Production Agreements:
-------------------------------
*** .1 Glendale Studios Production
Agreements
*** .2 Las Vegas Television Network, Inc.
.7 *** Lease Agreement dated January 17,
1996, with Integrated Telephony
Products, Inc.
.8 Agreements with Bradley M. (Brad) Tate:
----------------------------------------
*** .1 Memorandum of Service Agreement
*** .2 Consulting Agreement
.9 *** Alamo Leasing Agreement
.10 Letters of Intent:
-------------------
*** .1 Glendale Studios, Inc.
*** .2 Cherokee Indians of Georgia, Inc.
*** .3 Promotions International Corporation.
.11 Licensing Agreements:
---------------------
***.1 Fertina-C, LTD, March 25, 1992
(Greece)
***.2 Satellite Bingo, Inc. and Luis
Manuel Da Costa Matias, January
18, 1991(Brazil)
***.3 I.O. Report, C.A., March 23, 1993,
(Venezuela)
.1 2 LACOA Agreements
------------------
***.1 Lobbyist Engagement Agreement
***.2 Management Agreement
11. * Statement re computation of per
share earnings.
21. ** Subsidiaries of the Company.
99. Additional Exhibits:
--------------------
*** .1 Letter from Fletcher, Heald &
Hidreth to Ron Foster, dated April
10, 1992, referencing communica
tions with Cynthia Young, Assistant
Chief, Support of Litigation,
0rganized Crime and Racketeering
Section of the Criminal Division,
United States Department of
Justice.
*** .2 Letter from Fletcher, Heald &
<PAGE>
Hidreth to Ron Foster, dated March
19, 1992, referencing the legality
under federal law of SBI
Communications, Inc.'s programs
and planned subscription network.
*** .3 Correspondence between the
Federal Communications
Commission and Putbrese,
Hunsaker & Ruddy, dated
September 14, 1990 through
February 11, 1991, requesting a
request for declaratory ruling the
legality of advertising interactive
Bingo games on cable systems.
*** .4 Correspondence between
Sutherland, Asbill & Brennan and
the Federal Communications
Commission, from July 28, 1986,
until some undetermined time in
1987.
*** .5 Opinion letters to Ron Foster from
Sutherland, Asbill & Brennan dated
July 11 and 15, 1986.
*** .6 Letter involving the game C-Note,
dated June 18, 1993, referencing a
prohibition under Section
9-701(1(a) to the offer of games of
Bingo and keno in Nebraska, but
noting that such statute would not
appear to prohibit the broadcast of
the games into Nebraska, or, the
location in Nebraska of telephone
banks involving offers of the games
outside of Nebraska.
*** .7 Opinion Letter dated November 16,
1995, from Wiley, Rein & Fielding
(Washington, D.C.), re
Pay-per-view Bingo.
*** .8 Ordinance Number 429 (Bingo)
dated June 13, 1994, City Clerk of
Piedmont, Alabama.
*** .9 Alabama Constitution, Amendment
Number 508, Bingo Games in
Calhoun County.
***.10 Limited Appraisal of Frontier
Palace, dated May 1, 1995,
prepared by Phillip C. Ledbetter.
</TABLE>
_________
Incorporated by reference from the disclosure thereof in
the financial statements filed herewith.
** Incorporated by reference from the disclosure thereof at Part I,
Item I (Description of Business), located at page 3 of this
registration statement.
*** Provided in the original filing and/or first amendment fo the 10-SB.
<PAGE>
Additional Information
Headquarters
SBI Communications, Inc.
1239 South Glendale Avenue - Glendale, California 91205.
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
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
Jay Shapiro
Jay J. Shapiro, CPA, PC
16501 Ventura Boulevard; Suite 650; Encino, California 91436
Transfer Agent
Corporate Stock Transfer
3200 Cherry Creek Drive; Suite 430; Denver, Colorado 80209
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 Karien Anderson acting, Secretary, SBI Communications, Inc., at
the Company's headquarters listed above.
<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: August 23, 2000
/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.
[CAPTION]
<TABLE>
Signature Title Date
<S> <C> <C>
/s/Ronald Foster Chairman, President & Chief Financial Officer April 30, 1998
Ronald Foster
/s/ Karien Anderson Director, Secretary, Treasurer April 30, 1998
Karien Anderson
/s/ Claude Pichard Director, Vice President April 30, 1998
Claude Pichard
/s/ Mel Ray Director April 30, 1998
Mel Ray
/s/William Beggs Director April 30, 1998
William Beggs
</TABLE>
