U.S. SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 30549
FORM 10-KSB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS
Under Section 12(g) of
The Securities Exchange Act of 1934
AMERICA'S SPORTS VOICE, INC.
--------------------------------------------
(Name of Small Business Issuer in its charter)
NEW YORK 11-3363563
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(State or other jurisdiction of
corporation or organization) (I.R.S. Employee
Identification No.)
247 Broaday 11743
Huntington, New York (Zip code)
(Address of principal executive offices)
Issuer's telephone number: (631) 745-9200
Securities to be registered pursuant to Section 12(b) of the Act:
none
Securities to be registered pursuant to Section 12(g) of the Act:
COMMON STOCK
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(TITLE OF CLASS)
----------------
<PAGE>
ASPV SEC Filings Management Discussion: Investor -
America's Sports Voice Inc
Jun 00 Annual Report (SEC form 10KSB)
ITEM 1. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the America's
Sports Voice, Inc.'s (the "Company" or "ASV") audited financial statements and
notes thereto included herein. In connection with, and because it desires to
take advantage of, the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, the Company cautions readers regarding certain
forward looking statements in the following discussion and elsewhere in this
report and in any other statement made by, or on the behalf of the Company,
whether or not in future filings with the Securities and Exchange Commission.
Forward-looking statements are statements not based on historical information
and which relate to future operations, strategies, financial results or other
developments. Forward looking statements are necessarily based upon estimates
and assumptions that are inherently subject to significant business, economic
and competitive uncertainties and contingencies, many of which are beyond the
Company's control and many of which, with respect to future business decisions,
are subject to change. These uncertainties and contingencies can affect actual
results and could cause actual results to differ materially from those expressed
in any forward looking statements made by, or on behalf of, the Company. The
Company disclaims any obligation to update forward looking statements.
The Company generated no revenues during the twelve-month period ended June
30, 2000. The Company incurred $273,476 in selling, general and administrative
expenses and $356,350 in stock compensation, The Company wrote off $379,707 as
the balance on a bad debt note during the twelve-month period ended June 30,
2000. This cost was primarily as a result of expenses incurred by the Company
relating to the acquiring of a fully operational food processing plant in
Huntington, New York, the filing of a registration statement on Form 10-SB with
the Securities and Exchange Commission during the applicable period, as well as
additional legal and accounting expenses related to the acquisition consummated
by the Company in April 2000. In addition, a portion of this increase is
attributable to moving expenses, as the Company moved its principal place of
business during the three-month period ended March 31, 2000. The write off an
account receivable due from an unaffiliated party in the amount of $356,350, as
it appeared to management at that time, the likelihood of recovering all or a
portion of such receivable was not expected to occur in the foreseeable future,
or at all. (see notes in financial statements) on the possibility of recovery.
Management of the Company anticipates that the Company will generate significant
revenues with the new direction the Company has taken. The Company now directs
its business objectives into two areas outlined herein below under "Plan of
Operation."
ITEM 2. Plan of Operation
ASV is acting as a Holding Company while still operating as a high
technology, multi-media marketing company utilizing both the Internet and
publishing businesses to accomplish its business objectives. The Company intends
to provide timely sports information, sports programming, discounted travel
benefits and sports merchandise to its members through it's quarterly magazine
and Website. In addition, management is also reviewing various business
opportunities that have been presented, which opportunities are outside of the
current scope of the Company's business. ASV's entrance into the production and
distribution of food on a large wholesale level will impact its revenue. The
Company anticipates revenues not only from its present contracts within the
Airline Industry but in Supermarkets and School Lunch Programs. ie: Indications
from ShopRite Markets to purchase five of our (ready set gourmet, Italian
Foods) and the company's bid to the
<PAGE>
City of New York's Board of Education, to distribute about ten million dollars
worth of frozen food to their schools in the year 2001. The company has also
received favorable indications from other supermarkets to sell its frozen meals.
In addition, ASV has earmarked a national and international audience to
market its sports membership program. The Company is currently positioning to
launch its membership drive in the northeast United States, commencing in the
New York metropolitan area. To promote the ASV brand name to new regions and
markets, the Company expects to utilize television, radio, print, direct mail
advertising and trade shows in addition to Internet advertising. Each of the
advertising media is intended to solicit a different segment of the Company's
target market. Along with radio and print media, ASV expects to work with local
retail organizations, such as sporting good stores, sports bars and sports
memorabilia stores. This is expected to strengthen the ASV brand name to sports
fans in the places they frequent most.
The Company is endevering to positioning strategic alliances with various
organizations; this is paramount, considering the numerous Web Sites, pertaining
to Sports. These alliances will place "take-one" applications in their multiple
locations, thus developing alliance members. The locations in different
businesses will provide the Company with recognition and Web Site location to
prospective members and with discounts on goods and/or services. For
participating in this network, ASV will pay the retailer or organization a
commission on each member that signs up through their store or location. The
Company will utilize all efficient and cost effective means of attracting
additional members. Management feels that recent history and public outcry make
this the perfect time to launch the ASV membership marketing campaign.
ASV's membership program is offered for a $29.95 fee and intends to provide
its members with several benefits including (i) a multi-media website for them
to interact and access areas of interest; (ii) a comprehensive quarterly
magazine of approximately 16-24 pages, in full color; (iii) sports ticket
discounts; (iv) contests, prizes and giveaways; and (v) travel, merchandise and
service discounts. In addition, as the Company grows and if the membership
numbers increase (of which there can be no assurance)
ITEM 3. The Company's eventual ability to influence the owners, players and
sponsors should also increase.
ASV also intends to develop multi-media platforms from which to launch
other entertainment oriented projects. In this regard, ASV is currently in
negotiations with a radio station, Internet service provider and theatrical and
event ticket providers. These recent negotiations involve the production and
broadcast of the future ASV Sports Hour. The format will consist of sports
interviews and call-ins; a format sports fans are accustomed to and follow. This
broadcast will be available through the Company's website, providing ASV an
international reach with a local market and future syndication program. With the
Internet distribution the Company will reach more of its members and they can
listen live or at any convenient time because the content will be archived and
available on the website.
ASV's aggressive multi-media marketing campaigns will include utilizing the
Company's two Internet website and quarterly magazine along with traditional
print media, radio, television, billboard and sports trade shows. The Company
plans targeting sports enthusiasts by each of the above media. The Internet
advertising will consist of strategically placed ads on the world wide web.
Utilizing ASV's quarterly magazine, the Company will promote its brand identity.
Print media advertising will be represented by sports periodicals, daily
newspapers and entertainment magazines. Radio advertising will target sports
based broadcast stations across the country. Television commercials will run
during sporting events. Billboards will be used nationally throughout major
metropolitan cities. ASV also intends to attend the sports trade shows circuit
to market its products, as well as Food trade shows.
ITEM 4. It's ASV plans to capitalize on management's perceived enormous growth
of the Internet. Management believes Internet usage is growing significantly.
Thus far, Internet usage has grown from 50 million dollars in 1996, to a
projected one billion dollars by the Fourth year 2000. According to IBM's
<PAGE>
publicly reported research, in 1996 there was $900 million in Internet based
sales, $2 billion in 1997 and projected to $200 Billion in 2000. ASV can
capitalize on this growth to promote its Sports and Food Programs.
ASV has been developed to capitalize on opportunities in the field of
Internet commerce. Retail customer acceptance of secure electronic financial
transactions on the Internet have accelerated and the Company expects that it
will continue to grow. The Company will produce and distribute timely sports
news and scores, team information and player statistics at its web page and
print magazine. The scores and articles will be provided by a national news
service provider, downloaded to the Company's site multiple times a day and
integrated into the Company's magazine. By having both an Internet presence with
the Company's website and print magazine, ASV can expand its research to a
broader market group. The website content programming will include both sports
and non-sports celebrity interviews and editorials written by in-house
correspondents and freelance journalists. Daily Internet sports trivia contests,
in addition to weekly and monthly give away promotions will include ASV products
(hats, T-shirts, bags, etc.) and sporting event tickets. These promotions will
contribute to ASV's brand image. Management believes that it is extremely
important to build ASV's brand image, which should enable the Company in the
near future to attract advertisement revenue on the website and in the magazine
producing an additional stream of income from advertising revenues as the
Company's concept grows. The advertising and marketing campaign will blanket
targeted markets with saturation advertising. This will promote the America's
Sports Voice, Inc. brand name in the consumer marketplace. The national and
international market place will be broken down into regions. The first region to
be actively advertised and marketed will be the northeast United States focusing
on the New York metropolitan area marketplace to launch the Company's campaign.
The campaign will include the use of the major Internet search engines, such as
Excite, Yahoo, Lycos and Webcrawler, which will target a nationwide audience in
addition to European nations as far away as Japan, which alone has millions of
fans of American professional sports.
ASV's website will offer a multitude of timely and comprehensive sports
Information as well as it's food list for sports party's. Only the home page
(first i.e. magazine cover) will be available to all, but the core of the
content will not be accessible unless the person is a member. They can join by
calling the Company's toll free marquee number or instantly by a simple secure
transaction with a credit card over the Internet. This quick transaction will
provide the new member with a log on name and password allowing instant access
to all member content areas of the website, interviews, statistics information,
chat rooms and contest areas.
The site provides ASV with an additional future advertising revenue stream
as the site is visited and becomes a viable medium
ITEM 5. The Company intends to market to other companies interested in
marketing products or services and food to its members. Because Internet sites
which receive high visitor traffic develop huge databases, if the site is
successful (of which there can be no assurance) ASV will be able to capitalize
on this high visitor volume by offering marketing and consulting services to
multiple businesses which require database information in order to expand their
market penetration. Alliance members will be listed on the site as they are
signed up to instantly notifies members of new locations to receive discounts on
goods, services or food. The website will hold a multitude of contests such as
daily sports trivia, weekly contests and monthly drawings. The contests will
interest members to check the site often, even multiple times daily from home or
office quickly and easily. This traffic visiting the Company's website will act
as an incentive for potential advertisers to market their goods to the website's
visitors. The content of the website will change often, specifically daily
wherein sports related story and scores will be updated multiple times
throughout the day.
In addition to the Company's on-line interactive website, ASV intends to
offer its members a quarterly magazine that will focus on important sports
issues and how they relate to the average fan. The publishing industry is
benefiting from the tremendous growth in the popularity of sports in this
country over the past two decades. According to the Sports Management Research
Bureau research, the four major monthly
<PAGE>
magazines (Sports Illustrated, Inside Sports, Sporting News and Sport) have a
total of over 192 million adult readers each month. Sports Illustrated ranked
second among U.S. magazines in advertising revenues in 1996. Due to the
frustration with sports in this country today, ASV's magazine is expected to be
attractive to the majority of the current sports magazine readers.
ASV's magazine will differ from traditional sports publications, which tend
to consist of the news aspect of the games, most serving only to relay
information of what is happening without any offering of how fans relate to the
situations. These magazines and newspapers track the "what" while ASV can
include the "why" and the "how" of sporting events. In addition, alliance member
businesses who offer the Company's members a discount will be listed in each
issue. The magazine is expected to be between 16-24 pages in length and
Management has reached an agreement with a publisher to publish up to 60,000
copies in full color, at a cost of approximately $.37 per copy. This publisher
will also be used to publish a Gourmet Cuisine, publication at the same price.
As membership grows in the organization (of which there can be no
assurance) the magazine is expected to become an additional revenue stream
generating advertisers dollars. In the initial issues the Company will offer
deep discounts to organizations that will commit to a term of advertising based
on an increasing fee scale as membership builds.
ITEM 6. Aside from the serious issues in sports today, ASV will also offer its
members an entertaining side. This will consist of trivia questions, rotisserie
and fantasy league sections, fan mail and columns written by in-house staff,
freelance journalists, players and agents. The magazine and website will report
the hottest issues that concern the fan. These include franchise movement,
expansion, contract negotiations, ticket allocation, price increases, revenue
sharing and player conduct. Each quarter will include a section dedicated to
fans' comments. This will allow fans an additional venue besides the website to
express their opinions and concerns every quarter. In addition, ASV will track
player movements via trades and free agency, conduct player and owner
interviews, and invite players, owners and sports columnists to write a guest
column.
ASV's long term print media plan is to advertise in the sports section of
all major market newspapers throughout the country. The Company will also
advertise in many of the sports related magazines (i.e., Sporting News). In
addition, ASV will promote its membership via 24-hour sports talk radio
stations. The Company's plan is to strategically place ads on these stations
throughout the country during various segments and shows each day. These two
advertising venues will be launched simultaneously to ensure saturation of each
particular market.
In addition to radio and print media, ASV will work with local retail
organizations, such as sporting goods stores, sports bars and sports memorabilia
stores. This will help broaden the reach of the Company name to all sports fans
in every area of the country. These organizations will place "take-one"
applications in their stores and they will offer members discounts on their
products. For their services, ASV will offer a commission for each member that
signs up in their particular store. They will also be on a list of alliance
member organizations that offer members a discount, which are featured on the
Company's website and quarterly in the Company's magazine.
In sports revenues are derived from membership fees, renewal fees,
advertising sales and merchandise sales. Each income stream is driven by the
membership base, as the membership increases the advertising rates will increase
as well as an increase in volume of merchandise sales. ASV's advertising
revenues will be derived from the Company's two main outlets: its website and
the quarterly magazine. ASV's merchandise will include licensed and private
label apparel, sports memorabilia, historical sports videos and CD-ROM's.
The Company anticipates that it will require infusion of additional capital
to accomplish its business objectives described herein, in that anticipated
revenues from operations will be sufficient to fund operations.
<PAGE>
ITEM 7. Funding during such period, because the Company has entered the Food
Processing and Distribution business in addition to it's Sports Information
business there is a need to provide adequate funds, whether through additional
equity financing, debt financing or other sources, will be available when needed
or on terms acceptable to the Company. Further, any such funding may result in
significant dilution to existing stockholders. The inability to obtain
sufficient funds from operations and external sources when needed would have a
material adverse affect on the Company's business, results of operations and
financial condition. The company feels confident it can raise such funding but
can not guarantee that these funds will be available.
Subsequent Event
In May 2000, the Company consummated an acquisition of all of the issued
and outstanding stock and equipment of Gourmet Cuisine International, Ltd., a
privately held company and its three wholly owned subsidiary companies
(hereinafter jointly referred to as "GCI") these companies had revenue totaling
three million dollars per year, in exchange for the issuance of an aggregate of
400,000 shares of the Company's "restricted" common stock. GCI is engaged in the
business of processing gourmet meals for first class passengers on many
airlines. The Company initially received an assignment of a security interest
from Finova Capital Corporation ("Finova"), which held a first position security
interest in all of the assets of GCI as security for a loan with a principal
balance of $1,228,000 at the time the relevant note was acquired by the Company,
for which the Company paid an aggregate of $219,000. (see notes in financial
section). As stated in the financials, ASV will rescind the agreement with GCI
for just cause and foreclose on GCI as per the terms of the Finova agreement.
ASV will acquire all of the assets and receivables of GCI and place these assets
in Gourmet Cuisine Corporation, a wholly owned subsidiary of ASV.
In order to obtain the $219,000 necessary to acquire the security interest,
the Company obtained a loan from a minority shareholder in such amount. The
terms of this loan included interest accruing at the rate of 10% per annum,
which loan is due and payable two years from issuance. The relevant note
requires that interest only be paid during the two year term of the note, which
interest is payable quarterly. (see financial notes). The loan may be converted
to warrants at .50 per unregistered shares.
The Company has filed a report on Form 8-K with the Securities and Exchange
Commission, describing this acquisition in greater detail.
Liquidity and Capital Resources
The Company presently has nominal cash or cash equivalents. Because the
Company is not required to pay salaries to any of its officers or directors,
management believes that the Company has sufficient funds to continue operations
through the foreseeable future. The President of the Company has agreed to waive
any salaries due pursuant to his employment agreement with the Company until
such time as the Company begins generating revenues from operations, of which
there can be no assurance. The President has the right to convert his back
salary to 144 common stock by November 2001. The amount of the conversion will
be .10 per share or 30% of the bid price at the time of conversion.
The Company's cash flow issues have substantially changed as a result of
the acquisition described above herein. These changes are more fully described
in the relevant Form 8-K filed by the Company relating to this matter.
ITEM 8. Year 2000 Disclosure
Many existing computer programs use only two digits to identify a year in
the date field. These programs were designed and developed without considering
the impact of the recent change in the century.
<PAGE>
If not corrected, many computer applications were expected to fail or create
erroneous results by or at the Year 2000. As a result, many companies were
required to undertake major projects to address the Year 2000 issue. The Company
did not incur any negative impact as a result of this problem and no problems in
this regard are anticipated in the future.
<PAGE>
DATE OCTOBER 16, 2000
ALL INFORMATION FURNISHED HEREIN HAS BEEN PREPARED FROM THE BOOKS AND RECORDS
OBTAINED FROM AMERICA'S SPORTS VOICE, INC. (THE "COMPANY") IN ACCORDANCE WITH
RULE 15C2-11(A)(5) PROMULGATED UNDER THE SECURITIES AND EXCHANGE ACT OF 1934, AS
AMENDED, AND IS INTENDED ONLY AS INFORMATION TO BE USED BY SECURITIES
BROKERS/DEALERS.
NO DEALER, SALESMAN, OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED HEREIN IN CONNECTION
WITH THE COMPANY. ANY REPRESENTATION NOT CONTAINED HEREIN MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY.
The undersigned hereby certifies that the information herein is true and correct
to the best of their knowledge and belief.
AMERICA'S SPORTS VOICE, INC.
By: Mr. ANGELO J. PANZARELLA
---------------------------
President
<PAGE>
AMERICA'S SPORTS VOICE, INC.
(A DEVELOPMENT STAGE COMPANY)
INDEX TO FINANCIAL STATEMENTS
PAGE
----
Independent Auditors' Report F-2
Balance sheet F-3
Statements of operations F-4
Statement of stockholders' equity (deficit) F-5
Statements of cash flows F-6
Notes to financial statements F-7 - F-14
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
America's Sports Voice, Inc.
Port Washington, New York
We have audited the accompanying balance sheet of America's Sports Voice, Inc.
(a development stage company), as of June 30, 2000 and the related statements of
operations, shareholders' equity (deficit), and cash flows for the year then
ended. 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. The financial statements of America's Sports
Voice, Inc. for the year ended June 30, 1999 and the period February 17, 1997
(inception) through June 30, 1999, were audited by other auditors whose report
dated October 22, 1999, expressed an unqualified opinion.
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 whether the financial statements are free of 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 the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of America's Sports Voice, Inc. (a
development stage company) at June 30, 2000 and the results of its operations
and its cash flows for the year then ended, in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming that America's
Sports Voice, Inc. will continue as a going concern. As more fully described in
Note 8, the Company has incurred recurring operating losses. These conditions
raise substantial doubt about the Company's ability to continue as a going
concern. Management's plans in regard to these matters are also described in
Note 8. The financial statements do not include any adjustment to reflect the
possible future effects on the recoverability and classification of assets or
the amounts and classification of liabilities that may result from the outcome
of this uncertainty.
HORTON & COMPANY, L.L.C.
Wayne, New Jersey
October 12, 2000
F-2
<PAGE>
AMERICA'S SPORTS VOICE, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
JUNE 30, 2000
ASSETS
Current assets:
Cash $ 16,285
Loan receivable 1,150
-----------
Total current assets 17,435
-----------
Office equipment, net
of accumulated depreciation 145
-----------
Other assets:
Deposits 5,075
Deferred acquisition costs 340,969
-----------
Total other assets 346,044
-----------
Total assets $ 363,624
===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 276,061
Current portion of stockholder loans payable 157,467
-----------
Total current liabilities 433,528
-----------
Stockholder loans payable, net of current portion 219,000
-----------
Stockholders' deficit:
Common stock, $.0001 par value
150,000,000 shares authorized
8,837,500 shares issued and outstanding 884
Additional paid-in capital 1,128,221
Deficit accumulated during the development stage (1,418,009)
-----------
Total stockholders' deficit (288,904)
-----------
Total liabilities and stockholders' deficit $ 363,624
===========
See notes to financial statements
F-3
<PAGE>
AMERICA'S SPORTS VOICE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
FEBRUARY 12,
1997
YEAR ENDED JUNE 30, (INCEPTION)
------------------------ THROUGH
2000 1999 JUNE 30, 2000
----------- --------- -------------
Revenues $ -- $ -- $ --
----------- --------- -----------
Selling, general and administrative 273,476 121,621 581,952
Stock-based compensation 356,350 -- 356,350
Bad debt expense 379,707 100,000 479,707
----------- --------- -----------
1,009,524 221,621 1,418,009
----------- --------- -----------
Net loss $(1,009,524) $(221,621) $(1,418,009)
=========== ========= ===========
Basic loss per share $ (0.19) $ (0.06) $ (0.30)
=========== ========= ===========
Weighted average common
shares outstanding 5,398,116 3,868,070 4,712,912
=========== ========= ===========
See notes to financial statements
F-4
<PAGE>
AMERICA'S SPORTS VOICE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
DEFICIT
NUMBER OF ACCUMULATED
SHARES ADDITIONAL DURING THE
COMMON COMMON PAID-IN DEVELOPMENT
STOCK STOCK CAPITAL STAGE
--------- ------ ---------- -----------
Balance at February 17, 1997
(inception) -- $ -- $ -- $ --
Activity for June 30, 1997 3,127,500 313 312,037 --
Net loss -- -- -- (68,375)
--------- ------ ---------- -----------
Balance at June 30, 1997 3,127,500 313 312,037 (68,375)
Activity for June 30, 1998 870,000 87 288,413 --
Net loss -- -- -- (118,489)
--------- ------ ---------- -----------
Balance at June 30, 1998 3,997,500 400 600,450 (186,864)
Stock issued in private
placement 990,000 99 123,056 --
Net loss -- -- -- (221,621)
--------- ------ ---------- -----------
Balance at June 30, 1999 4,987,500 499 723,506 (408,485)
Stock issued in private
placement 2,000,000 200 29,800 --
Stock issued as compensation 1,600,000 160 356,190 --
Options exercised 250,000 25 18,725 --
Net loss -- -- -- (1,009,524)
--------- ------ ---------- -----------
Balance at June 30, 2000 8,837,500 $ 884 $1,128,221 $(1,418,009)
========= ====== ========== ===========
See notes to financial statements
F-5
<PAGE>
AMERICA'S SPORTS VOICE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
FEBRUARY 12,
1997
YEAR ENDED JUNE 30, (INCEPTION)
----------------------- THROUGH
2000 1999 JUNE 30, 2000
----------- -------- -------------
Net loss $(1,009,524) $(121,621) $(1,418,009)
Adjustments to reconcile net loss
to net cash provided by (used in)
operating activities:
Bad debts 379,707 -- 479,707
Depreciation 1,540 574 2,930
Stock-based compensation 356,350 -- 356,350
Increase in accounts payable
and accrued expenses 210,124 65,937 276,061
Increase in security deposits (5,000) (75) (5,075)
----------- -------- -----------
Net cash used in operating
activities (66,803) (55,185) (308,036)
----------- -------- -----------
Cash flows from investing activities:
Capital expenditures -- (1,225) (3,075)
Loans (advanced) repaid 12,565 (66,744) (467,142)
Deferred acquisition costs (340,969) -- (340,969)
----------- -------- -----------
Net cash used in investing
activities (328,404) (67,969) (811,186)
----------- -------- -----------
Cash flows from financing activities:
Stockholder loans 376,467 -- 376,467
Proceeds from issuance of
common stock 35,035 123,155 759,040
----------- -------- -----------
Net cash provided by financing
activities 411,502 123,155 1,135,507
----------- -------- -----------
Net increase in cash 16,295 1 16,285
Cash, beginning of period (10) (11) --
----------- -------- -----------
Cash, end of period $ 16,285 $ (10) $ 16,285
=========== ======== ===========
See notes to financial statements
F-6
<PAGE>
AMERICA'S SPORTS VOICE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of America's Sports Voice,
Inc. (hereinafter "ASV" or the "Company") is presented to assist in
understanding the financial statements. The financial statements and notes
are representations of the management of America's Sports Voice, Inc.,
which is responsible for their integrity and objectivity. These accounting
policies conform to generally accepted accounting principles and have been
consistently applied in the preparation of the financial statements.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts 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 period. Actual results could differ from those estimates.
HISTORY AND BUSINESS ACTIVITY
The Company was incorporated in the State of New York in February 1997. The
Company was formed to create a sports fan advocacy group that provides
information, sports programming and sports merchandise. Since inception,
the Company has not generated any revenues from its intended principal
business activity.
Effective June 28, 2000, the Company created a wholly-owned subsidiary,
Gourmet Cuisine Corp., which was formed for the purpose of acquiring the
assets and business of Gourmet Cuisines International, Ltd., as described
in Note 6.
OFFICE EQUIPMENT AND DEPRECIATION
Office equipment is stated at cost. Upon retirement or disposal of assets,
the cost and accumulated depreciation are eliminated and the resulting gain
or loss is included in income. Maintenance and repairs are expensed as
incurred. Depreciation of equipment is provided over the estimated useful
lives of the various assets. Generally, the equipment has been depreciated
using the straight-line method over a period of 5 years. Depreciation
expense was $1,540 for the year ended June 30, 2000.
F-7
<PAGE>
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
DEFERRED ACQUISITION COSTS
Deferred acquisition costs represent the costs associated with the planned
acquisition described in Note 6. Deferred acquisition costs are capitalized
as a component of total acquisition costs upon successful consummation of a
planned acquisition. Such costs are expensed upon determination that a
proposed acquisition is unlikely to occur.
CONCENTRATION OF CREDIT RISK
Financial instruments that potentially subject the Company to concentration
of credit risk are primarily loans receivable. The Company's credit risk
concerning loans receivable is discussed in Note 2.
RECLASSIFICATIONS
Certain reclassifications have been made to the 1999 financial statements
in order to conform to the 2000 presentation.
2. LOANS RECEIVABLE
The Company has advanced funds to a former affiliate, Dawcin International
Corp. ("Dawcin"). The Company has an agreement with Dawcin whereby the
parties share office space, employee services, and other administrative
items. Since inception, the amount of unused advances to Dawcin for such
administrative expenses allocated to the Company results in a loan
receivable due from Dawcin in the amount of $439,808. The loan receivable
is non-interest bearing and is payable upon demand. The loan receivable is
secured by assets owned by Dawcin. During the year ended June 30, 1999,
management estimated that approximately $100,000 of this loan was not
collectible, therefore, a bad debt reserve was established. During the year
ended June 30, 2000, management elected to write-off the remaining balance,
since it appeared that the likelihood of recovering all or a portion of
such receivable was not expected to occur in the foreseeable future, if at
all.
While it is doubtful that Dawcin will have the ability to repay its
indebtedness to the Company, Dawcin assigned to ASV, its interest in a
$668,000 note receivable. The note, which is in default, is receivable from
H.A.S. Services, Inc., Berwyn Holdings, Inc. and Century Financial
Services, Inc. While Dawcin assigned the note to ASV, other creditors of
Dawcin may challenge such assignment of assets. The outcome of such matter
cannot be determined at present. However, in the opinion of management and
of legal counsel, the plaintiffs should be able to obtain a judgment and
the amount of the note should be collectable.
During the year ended June 30, 1998, the Company advanced $39,899 to an
individual in connection with certain services being provided to the
Company. Such advance was an uncollateralized, non-interest bearing demand
loan. During the year ended June 30, 2000, management determined that
collectability of such loan was doubtful and established a bad debt reserve
for the entire balance.
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3. STOCKHOLDER LOANS PAYABLE
Stockholder loans payable consist of the following:
Unsecured 10% loan payable to MGZ International Corp.
("MGZ"), a minority stockholder. Principal is due May 2002.
Interest only is payable quarterly.
$219,000
Unsecured, non-interest bearing demand loan payable to MGZ. 157,467
--------
376,467
Less current portion 157,467
--------
Stockholder loans payable, net of current portion $219,000
========
In conjunction with the loans payable to MGZ described above, the Company
granted the noteholder the option to convert the principal amount of the
note into as many as 1 million shares of the Company's common stock at a
conversion price of $0.50 per share. The noteholder may exercise its option
to convert through February 2001.
In addition to funds advanced directly to the Company, MGZ has made other
payments on behalf of the Company. Subsequent to year-end, MGZ claims to
have advanced more funds than ASV can account for. As a result, there is
disagreement as to the total amount of the loan. However, the parties agree
that the total balance is between $400,000 and $550,000 and are taking
steps to reconcile their differences. Management is confident that such
differences will be resolved to the satisfaction of the Company.
4. COMMON STOCK TRANSACTIONS
For the years ended June 30, 2000 and 1999, 2,000,000 and 990,000 new
shares were issued in private placements resulting in proceeds of $123,155
and $30,000, respectively. During the year ended June 30, 2000, the Company
issued a total of 1,600,000 shares of its common stock for various services
provided to the Company. Such issuances were recorded at the fair market
value of the Company's common stock on the relevant dates.
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<PAGE>
5. COMMITMENTS AND CONTINGENCIES
EMPLOYMENT CONTRACT
Effective September 1998, the Company entered into an employment contract
with the Company's President. Such employment contract is for a 5-year
period and provides for annual compensation of $98,000. As of June 30,
2000, accounts payable includes $256,061 of unpaid compensation due to the
Company's president and to other employees.
During November 1999, the Company's Board of Directors, in recognition
compensation that had not been paid to the Company's President, authorized
the issuance of options whereby the President may convert any unpaid
compensation to shares of the Company's common stock. Such conversion will
be at the greater of $0.10 per share or 30% under the bid price. Such
option may be exercised until September 2001.
DEPOSIT ON LAND
During the year ended June 30, 2000, the Company placed a $5,000 deposit on
the purchase of a tract of land near Utica, New York. Such land is to be
utilized in the establishment of a food processing plant in conjunction
with the proposed acquisition of Gourmet Cuisine International, Ltd. (Note
6).
CONSULTING AGREEMENT
During April 2000, the Company entered into a consulting agreement with MGZ
International Corp. ("MGZ"), a minority stockholder. Under the terms of the
agreement, MGZ was entitled to an $80,000 fee upon the acquisition of the
business of CGI, as described in Note 6. Since the acquisition has not been
consummated as of June 30, 2000, no consulting fees have been recorded by
the Company.
In connection with the consulting agreement, the Company issued 1 million
warrants to MGZ, which may be exercised to purchase 1 million shares of the
Company's common stock at an exercise price of $0.50 per share for a period
of one year.
LOAN AGREEMENT
During February 2000, ASV entered into a loan agreement with Pacificom
("Pacificom"). Under the terms of the agreement, Pacificom agreed to loan
ASV up to $1 million at 11% interest with unpaid principal and interest due
December 31, 2000. The agreement is secured by 1 million shares of the
Company's common stock which was pledged by MGZ International Corp.
("MGZ"), a minority stockholder. See note 3.
In addition, the lender received the option to purchase up to 10 million
shares of the Company's common stock at $0.10 per share. Such options may
be exercised during the month of December 2000. The Company also has the
right to acquire up to 900,000 of the options from Pacificom at a purchase
price of $0.10 per share, at any time prior to December 2000.
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<PAGE>
5. COMMITMENTS AND CONTINGENCIES (CONTINUED)
LOAN AGREEMENT (CONTINUED)
However, Pacificom did not make any direct loans to ASV. Instead, Pacificom
advanced funds to MGZ. Such funds were used by MGZ to make loans to ASV.
Accordingly, the total outstanding obligation of the Company is the loan
payable to MGZ described in Note 3. The Company, MGZ and Pacificom are
currently negotiating a revision to the original loan agreement, which
would recognize that ASV would have no direct indebtedness to Pacificom.
The Company's management and legal counsel believe that such revision will
be effected on terms satisfactory to the Company.
MANAGEMENT AGREEMENT
Effective February 1, 2000, the Company entered into an agreement with
Hannelore Gourmet Foods, Ltd. ("Hannelore"), a wholly-owned subsidiary of
CGI (Note 6) to manage Hannelore's business and finances. The agreement is
for a one-year period ending January 31, 2000, but may be terminated by
either party upon 30-day written notice. The Company is to be paid 50% of
the profits of Hannelore at the end of the contract. The Company has not
recorded any management revenue during the period ended June 30, 2000.
LITIGATION
The Company is involved in two matters arising out of the demised premises
utilized by the Company to operate the food processing and food
distribution business of GCI and its wholly-owned subsidiary, Hannelore as
described in Note 6. The first matter is a litigation which involves a
claim by the 247 Broadway, LLC as Landlord for back rent and an Order of
Eviction of the tenant. Settlement negotiations are underway to resolve
this matter without the Company having to pay a substantial sum. In
addition, the mortgage holder on the demised premises has obtained a
Judgment of Foreclosure against 247 Broadway and Hannelore Gourmet Foods as
the guarantor of said mortgage obligation. Presently, there is a Mortgage
Foreclosure Sale scheduled to take place on October 23, 2000. The Company
has been in negotiations with the mortgage holder and believes that it will
be able to acquire the property or enter into a long-term lease in order to
continue its operations at the demise premises with the mortgage holder
once it takes repossession of the property from 247 Broadway.
During the year ended June 30, 2000, the Company instituted a legal action
against First Capital, Inc., a Florida stock brokerage firm. The action
seeks the return of 600,000 shares of the Company's common stock which were
issued to First Capital for services to be rendered in connection with
promotion of the Company's stock. ASV alleges that such services were never
provided. While the outcome of the matter cannot be determined at this
time, in the opinion of management, the matter will ultimately be resolved
on terms favorable to the Company.
In addition, the Company is a plaintiff in the litigation described in Note
2.
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<PAGE>
6. PLANNED ACQUISITION
In May 2000, the Company entered into an agreement to acquire all of the
issued and outstanding stock of Gourmet Cuisines International, Ltd., a
privately held company and its three wholly-owned subsidiary companies
(hereinafter jointly referred to as "GCI") in exchange for the issuance of
an aggregate of 400,000 shares of the Company's "restricted" common stock.
GCI is engaged in the business of processing gourmet meals for first class
passengers on may airlines. In conjunction therewith, the Company received
an assignment of a security interest from Finova Capital Corporation
("Finova"), which held a first position security interest in all of the
assets of GCI, for which the Company paid an aggregate of $219,000. The
outstanding principal balance owed by GCI to Finova was $1,228,000 at the
time the note and security interest was acquired by the Company.
In order to obtain the $219,000 necessary to acquire the security interest,
the Company obtained a loan from a minority shareholder in such amount. The
terms of this loan included interest accruing at the rate of 10% per annum,
which loan is due and payable two years from issuance. The relevant note
requires that interest only be paid during the two-year term of the note,
which interest is payable quarterly (Note 3).
GCI is the processor and producer of a variety of high-quality gourmet
foods. GCI was incorporated under the laws of the State of Delaware in
1982. GCI specializes in producing gourmet foods which are sold primarily
to the airline industry, food service companies, catering operations,
resort hotels and upscale restaurants.
Management intends to expand GCI's current operations into additional areas
of business including government school contracts, home replacement meals,
specialty gourmet food catalogs, department stores and food emporiums,
wholesale food processing and cruise shipping lines. In addition,
management is looking to increase the current business within the airline
and hotel industry.
These proposed increases will necessitate the expansion to a new facility
to be built in Utica, New York. The 43,000 square foot facility will be
built on a five-acre site. As of the date of this report, management has
held discussions with the federal government, the State of New York and the
City of Utica, NY, for purposes of exploring the possibility of having
these governmental entities provide grants to the Company to assist in this
expansion. As a result, the Company had received a grant from the Empire
State Development Corp. in the amount of $375,000, to be utilized for the
purchase of new equipment at the proposed new plant, and a grant from the
New York State Department of Labor, to cover 50% of payroll once the new
plant commences operations. Discussions are currently being conducted to
obtain additional grants, including a $500,000 grant for working capital
purposes and $400,000 to train new employees.
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<PAGE>
6. PLANNED ACQUISITION (CONTINUED)
Subsequent to entering into the agreement, the Company discovered that GCI
had significant undisclosed liabilities. Such liabilities included a $5
million lawsuit against GCI. The Company also discovered that GCI was the
guarantor of a mortgage on 247 Broadway, LLC (an affiliate of GCI). Such
mortgage is in foreclosure proceedings for non-payment. The land and
building owned by 247 Broadway, LLC serve as the location of GCI's business
operations.
As a result of the above developments, the Company decided not to close on
the acquisition of GCI. Instead, the Company is planning to exercise its
security interest acquired from Finova to foreclose on the related unpaid
note and thereby acquire all the assets of GCI, including GCI's
wholly-owned subsidiaries. Such assets will be assigned to Gourmet Cuisine
Corp., the Company's wholly-owned subsidiary. In addition, the Company has
personal guarantees from the two stockholders of GCI.
Such plans are contingent upon the Company's ability to capitalize the food
processing operations, to obtain financing in the amount of approximately
$160,000 to acquire real estate to establish the planned operations in
Utica and to obtain financing in the amount of approximately $975,000 to
acquire GCI's existing operating facilities.
7. INCOME TAXES
As of June 30, 2000, the Company has net operating losses available for
carryforward to offset future years' taxable income. The net operating
losses expire in the years 2017 through 2020.
Deferred income taxes arise from temporary differences in reporting assets
and liabilities for income tax and financial accounting purposes primarily
resulting from net operating loses. The components of the deferred tax
asset and the related tax effects of the temporary differences are as
follows:
Non-current deferred income tax asset arising from
net operating loss carryforward $ 411,000
Valuation allowance (411,000)
---------
$ --
=========
Because of the uncertainty of the Company's ability to generate taxable
income in the future to utilize the deferred tax assets, such assets have
been fully reserved through a valuation allowance. The net increase in the
deferred income tax asset and the offsetting valuation allowance was
$288,000 for the year ended June 30, 2000.
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<PAGE>
8. GOING CONCERN
The financial statements have been prepared assuming that the Company will
continue as a going concern. The Company had suffered losses from
operations that raises substantial doubt about its ability to continue as a
going concern. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
Management has stated that it is committed to establishing business
operations that will eliminate the going concern issue. See Note 6.
9. SUBSEQUENT EVENTS
Subsequent to June 30, 2000, the Company issued a total of 520,000 shares
of stock. Of those shares, 120,000 were issued in a private placement,
yielding proceeds of $50,000 and 400,000 shares were issued as compensation
valued at $160,000.
F-14
