U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of
1934
[ ] For the quarterly period ended March 31, 1998
[ ] Transition Report Under Section 13 or 15(d) of
the Exchange Act
For the transition period from ____________ to ____________.
Commission file number 0-23929
GAY ENTERTAINMENT TELEVISION, INC.
(Exact Name of Small Business Issuer as Specified in Its Charter)
NEW YORK 13-3693919
---------------------- -----------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
7 EAST 17TH STREET, NEW YORK, NEW YORK 10003
(Address of Principal Executive Office)
(212) 255-8824
-----------------------------------
(Issuer's Telephone Number, Including Area Code)
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes |_| No |X|
The number of shares outstanding of the issuer's common stock, par value $.0001
per share as of May 12, 1998 was 2,775,000.
Traditional Small Business Disclosure Format: Yes|X| No |_|
<PAGE>
GAY ENTERTAINMENT TELEVISION, INC.
INDEX TO FINANCIAL STATEMENTS
PART I. FINANCIAL STATEMENTS
ITEM. 1 Financial Statements
Balance Sheets as of March 31, 1998 (unaudited)
and September 30, 1997
Statements of Operations for the three months ended
March 31, 1998 (unaudited) and March 31, 1997
(unaudited)
Statements of Changes in Shareholders' Deficiency
Statements of Cash Flows for the three months ended
March 31, 1998 (unaudited) and March 31, 1997
(unaudited)
Notes to Financial Statements
2
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<TABLE>
<CAPTION>
GAY ENTERTAINMENT TELEVISION, INC.
(A Development Stage Company)
Balance Sheets
A S S E T S
AS OF AS OF
MARCH 31, 1998 SEPTEMBER 30, 1997
-------------- ------------------
(UNAUDITED)
<S> <C> <C>
Current Assets:
Cash $ - $ 3,711
Due from shareholder 81,861 27,843
------------- -------------
Total Current Assets 81,861 31,554
------------- -------------
Equipment 7,179 7,179
Less accumulated depreciation (5,625) (4,907)
------------- -------------
1,554 2,272
------------- -------------
Organization costs, net of accumulated amortization
of $604 as of September 30, 1997 - 56
------------- -------------
Deposits and other assets 7,416 5,290
------------- -------------
Offering costs 142,199 71,508
------------- -------------
$ 233,030 $ 110,680
============= =============
LIABILITIES AND SHAREHOLDERS' DEFICIENCY
Current Liabilities:
Notes payable $ 25,000 $ 25,000
Notes payable--shareholders 422,000 259,000
Accounts payable 22,704 16,782
Accrued expenses 37,551 23,801
------------- -------------
Total Current Liabilities 507,255 324,583
------------- -------------
Long-Term Debt - 3,000
------------- -------------
Accrued Expenses - 258
------------- -------------
Shareholders' Deficiency:
Common stock, $.0001 par value, 40,000,000 shares
authorized, 2,775,000 shares issued and outstanding
in 1997 and 1998 278 278
Additional paid-in capital 45,131 45,131
Deficit accumulated during the development stage (319,634) (262,570)
------------- -------------
Total Shareholders' Deficiency (274,225) (217,161)
------------- -------------
$ 233,030 $ 110,680
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
GAY ENTERTAINMENT TELEVISION, INC.
(A Development Stage Company)
Statements of Operations
THREE THREE SIX FIVE
MONTHS ENDED MONTHS ENDED MONTHS ENDED MONTHS ENDED
MARCH 31, 1998 MARCH 31, 1997 MARCH 31, 1998 MARCH 31, 1997
-------------- -------------- -------------- --------------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Net Sales $ - $ - $ - $ 15,978
Cost of Sales - - - 7,214
------------- --------------- -------------- --------------
Gross Profit - - - 8,764
General and Administrative
Expenses 28,662 11,886 57,064 27,532
------------- --------------- -------------- --------------
Net Loss $ (28,662) $ (11,886) $ (57,064) $ (18,768)
============= =============== ============== ==============
Net Loss per Common Share (.01) (.005) (.02) (.01)
============= =============== ============== ==============
Weighted Average
Shares Outstanding 2,775,000 2,406,500 2,775,000 2,377,900
============= =============== ============== ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
GAY ENTERTAINMENT TELEVISION, INC.
(A Development Stage Company)
Statements of Changes in Shareholders' Deficiency
DEFICIT
COMMON STOCK ACCUMULATED
-------------------------------- ADDITIONAL DURING THE
SHARES PAID-IN DEVELOPMENT
ISSUED AMOUNT CAPITAL STAGE TOTAL
-------------- ----------- ---------- ----------- -----
<S> <C> <C> <C> <C> <C>
Balance at October 31, 1996 2,335,000 $ 234 $ - $ (147,736) $ (147,502)
Issuance of Common Stock 440,000 44 45,131 - 45,175
Net Loss for the Eleven Months
Ended September 30, 1997 - - - (114,834) (114,834)
--------- --------- ---------- ----------- ------------
Balance at September 30, 1997 2,775,000 278 45,131 (262,570) (217,161)
Net Loss for the Six Months Ended
March 31, 1998 (unaudited) - - - (57,064) (57,064)
--------- --------- ---------- ----------- ------------
Balance at March 31, 1998
(Unaudited) 2,775,000 278 $ 45,131 $ (319,634) $ (274,225)
========= ========= ========== =========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
GAY ENTERTAINMENT TELEVISION, INC.
(A Development Stage Company)
Statements of Cash Flows
SIX MONTHS ENDED FIVE MONTHS ENDED
MARCH 31, 1998 MARCH 31, 1997
-------------- --------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Cash Flows from Operating Activities:
Net loss $ (57,064) $ (18,768)
Adjustments to reconcile net loss to net cash
(used) provided by operating activities:
Depreciation and amortization 774 403
Issuance of common stock for services - 3,575
Changes in operating assets and liabilities:
Decrease (increase) in:
Due from shareholder (54,018) 4,020
Deposits and other assets (2,126) -
Increase (decrease) in:
Accounts payable 5,922 1,063
Accrued expenses 13,492 4,282
-------------- -------------
Net Cash Used by Operating Activities (93,020) (5,425)
-------------- -------------
Cash Flows from Financing Activities:
Borrowing under notes payable 160,000 -
(Repayment of) borrowing under shareholder advances, net - 32
Offering costs (70,691) -
-------------- ------------
Net Cash Provided by Financing Activities 89,309 32
-------------- ------------
Net Decrease in Cash (3,711) (5,393)
Cash - Beginning of Period 3,711 5,393
-------------- ------------
Cash - End of Period $ - $ -
============== ============
Supplemental Disclosure of Non-Cash Financing Activities:
Common stock issued for services $ - $ 3,575
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
GAY ENTERTAINMENT TELEVISION, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED) WITH RESPECT TO MARCH 31, 1997 AND 1998
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
OPERATIONS--Gay Entertainment Television, Inc. (a New York corporation referred
to herein as the "Company") was founded in 1992 to promote cable television
programming targeted specifically to the gay community.
BASIS OF PRESENTATION -- The quarterly financial information included herein is
unaudited; however, such information reflects all adjustments (consisting solely
of normal recurring adjustments) which are, in the opinion of management,
necessary for a fair statement of results for the interim period.
For further information, refer to the financial statements and notes thereto
included in the Company's registration statement on Form SB-2 asof and for the
year ended September 30, 1997.
EARNINGS PER SHARE -- Earnings (losses) per share are based on the weighted
average number of shares outstanding for each period presented.
In January 1997, the Company issued an aggregate of 71,500 shares of common
stock to several volunteers who performed services on behalf of the Company on a
pro-bono basis. Eachof these persons were provided with or otherwise had access
to information concerning the Company. Of these shares, 25,000 were issued to an
individual, who will become a Director of the Company upon the closing of this
offering and to whom the Company owes the principal amount of $12,500, plus
accrued interest.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSES OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The Company is a development stage company which creates, develops, acquires and
distributes programming relating to the gay and lesbian lifestyle. The Company's
revenues will initially consist of revenues from advertising, and other revenue
sources from its soon to be developed website. The Company will generate
television advertising revenues by selling air time to advertisers. The
Company's operating expenses will consist of (1) production expenses, (2)
selling and marketing expenses, (3) costs associated with the acquisition of air
time on leased access channels, and (4) general and administrative expenses.
Production expenses consist primarily of distribution and delivery costs related
to the operation of the Company's programming and eventually its own channel.
Selling and marketing expenses include salaries, travel and other associated
expenses related to the Company's marketing efforts.
QUARTER ENDED MARCH 31, 1998 (UNAUDITED) COMPARED TO MARCH 31, 1997 (UNAUDITED)
There were no revenues or cost of sales for the quarters ended March 31, 1998 or
1997 because the Company concluded its test marketing in December 1997, and
concentrated its efforts to raising capital. This capital will be used to
produce up to four hours of original programming and to acquire not less than
two hours of acquired programming for an aggregate of six hours of programming
for transmission on a weekly basis in up to 20 targeted markets.
General and administrative increased $16,776, or 141%, due to an increase in
operating activities relating to the Company marketing itself to increase public
awareness of the future activities of the Company as it is currently
concentrating its efforts on completing the sale of its securities through a
public offering.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1998, the Company was still a development stage company, where, in
its present financial condition, substantial doubt exists about its ability to
continue as a going concern , unless it completes the sale of its securities
from its initial public offering, or additional financing can be obtained. On
March 20, 1998, after S.E.C. approval, the Company's initial public offering
became effective. Presently management is attempting to raise between $8,000,000
and $10,000,000 on a "best efforts, minimum-maximum" basis. At March 31, 1998,
total liabilities exceed total assets by $274, 225, which represents cumulative
losses since inception. The Company increased borrowings from Richard P.
Moorehead, a director of the Company, by $160,000, as the Company currently has
no revenues and is concentrating its efforts on completing the sale of its
securities. The proceeds of the additional loan were used to cover its operating
expenses from October 1, 1997 through March 31, 1998, which resulted in a net
loss of $57,064, and to fund additional offering costs of $70,691.
When the Company was organized in November 1992, it elected to have its fiscal
year commence as of November 1st. Management now believes that as a public
company, a September 30th year end is more appropriate. As a result, effective
with the period ended September 30, 1997, the Company has elected to change its
fiscal year end from October 31 to September 30. The statements of operations
and statements of cash flows reflect five months of activity from November 1,
1996 through March 31, 1997, rather than six months. As the Company has limited
activities, the one month difference does not have a material impact on the
financial statements.
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
27 Financial Data Schedule
(b) Reports on Form 8-K:
None.
3
<PAGE>
SIGNATURES
In accordance with Section 13 or 15 (d) of the Securities Exchange Act
of 1934, Gay Entertainment Television, Inc. has caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
GAY ENTERTAINMENT TELEVISION, INC.
DATE: May 15, 1998 By: /S/ MARVIN A. SCHWAM
---------------------
Marvin A. Schwam, Director, Chief
Executive Officer and President
DATE: May 15, 1998 By: /S/ DAVID MAYER
---------------
David Mayer, Director
4
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
- ------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 81,863
<PP&E> 7,179
<DEPRECIATION> (5,625)
<TOTAL-ASSETS> 233,030
<CURRENT-LIABILITIES> 507,255
<BONDS> 0
0
0
<COMMON> 278
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 23,030
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 28,662
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (28,662)
<EPS-PRIMARY> (0.01)
<EPS-DILUTED> 0
</TABLE>
