UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1999 Commission File Number 333-51683
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World House Entertainment, Inc.
-------------------------------
(Exact name of registrant as specified in its charter)
Nevada 87-0567884
------ ----------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2831 Dogwood Place Nashville, Tennessee 37204
- --------------------------------------- -----
(Address of principal executive offices) (Zip code)
(615) 269-8682
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year, if
changed since last report.)
Indicate by check whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock $.001 par value 780,000
- ---------------------------- -------
Class Number of shares outstanding at April 6, 1999
This document is comprised of 11 pages.
<PAGE>
FORM 10-QSB
1ST QUARTER
WORLD HOUSE ENTERTAINMENT, INC.
-------------------------------
March 31, 1999
(Unaudited)
INDEX
Page
----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements *
Condensed, consolidated balance sheet - March 31, 1999 (Unaudited)...... 3
Condensed, consolidated statements of operations - Three months
ended March 31, 1999 and March 31, 1998 (Unaudited).................. 4
Condensed, consolidated statements of cash flows - Three months
ended March 31, 1999 and March 31, 1998 (Unaudited)................... 5
Notes to condensed, consolidated financial statements (Unaudited)...... 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.......................... 8
PART II - OTHER INFORMATION.................................................. 9
Item 1. Legal Proceedings
Item 2. Changes In Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters To A Vote of Security Holders
Item 5. Other Information Item 6. Exhibits and Reports on Form 8-K
Item 6. Exhibits and Reports on Form 8-K
Signatures ............................................................. 10
* The accompanying financial statements are not covered by an
independent Certified Public Accountant's report.
2
<PAGE>
Part I. Item 1. Financial information
WORLD HOUSE ENTERTAINMENT, INC.
-------------------------------
Condensed, Consolidated Balance Sheet
March 31, 1999
(Unaudited)
ASSETS
CURRENT ASSETS
Cash ...................................................... $ 1,943
Other current assets ...................................... 450
---------
TOTAL CURRENT ASSETS 2,393
PROPERTY AND EQUIPMENT, NET ................................... 16,050
---------
$ 18,443
=========
LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued liabilities ................... $ 25,268
Short-term debt ............................................ 7,500
Indebtedness to related party - short-term ................. 2,248
---------
TOTAL CURRENT LIABILITIES 35,016
---------
SHAREHOLDERS' DEFICIT
Common stock ............................................... 780
Additional paid-in capital ................................. 205,782
Retained deficit ........................................... (223,135)
---------
TOTAL SHAREHOLDERS' DEFICIT (16,573)
---------
$ 18,443
=========
See accompanying notes to condensed, consolidated financial statements
3
<PAGE>
WORLD HOUSE ENTERTAINMENT, INC.
-------------------------------
Condensed, Consolidated Statements of Operations
(Unaudited)
Three Months Ended
March 31,
------------------------
1999 1998
---- ----
REVENUES ......................................... $ 3,847 $ 4,850
--------- ---------
COSTS AND EXPENSES
General and administrative .................... 17,073 16,679
Provision for bad debts ....................... 2,500 2,500
Related party expenses ........................ 4,500 4,500
--------- ---------
24,073 23,679
--------- ---------
OPERATING (LOSS) (20,226) (18,829)
OTHER INCOME (EXPENSE)
Interest Income ............................... 2,500 2,500
Interest Expense .............................. (713) (4,082)
--------- ---------
LOSS BEFORE INCOME TAXES (18,439) (20,411)
INCOME TAXES ..................................... -- --
--------- ---------
NET (LOSS) $ (18,439) $ (20,411)
========= =========
Basic loss per common share ...................... $ (.02) $ (.03)
--------- ---------
Basic common shares outstanding .................. 760,000 700,000
========= =========
See accompanying notes to condensed, consolidated financial statements
4
<PAGE>
WORLD HOUSE ENTERTAINMENT, INC.
-------------------------------
Condensed, Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended
March 31,
-----------------------
1999 1998
---- ----
NET CASH (USED IN)
OPERATING ACTIVITIES $ (44,800) $ (16,878)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment ................ (1,244) --
--------- ---------
NET CASH (USED IN)
INVESTING ACTIVITIES (1,244) --
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of notes payable ....................... (150,000) --
Proceeds from issuance of notes payable .......... -- 26,250
Shareholder advance .............................. 2,117 --
Proceeds from sale of stock ...................... 200,000 --
Cash paid for offering costs ..................... (4,707) (4,000)
--------- ---------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 47,410 22,250
--------- ---------
NET INCREASE IN CASH 1,366 5,372
CASH, BEGINNING OF PERIOD ............................ 577 7,709
--------- ---------
CASH, END OF PERIOD $ 1,943 $ 13,081
========= =========
Supplemental disclosures of cash flows information:
Interest paid ........................................ $ 18,438 $ --
========= =========
Income taxes paid .................................... $ -- $ --
========= =========
See accompanying notes to condensed, consolidated financial statements
5
<PAGE>
WORLD HOUSE ENTERTAINMENT, INC.
-------------------------------
Notes to Condensed, Consolidated Financial Statements
(Unaudited)
March 31, 1999
Note A: Management's Statement
- ------------------------------
In the opinion of management, the accompanying unaudited condensed, consolidated
financial statements contain all adjustments (all of which are normal and
recurring in nature) necessary to present fairly the financial position of World
House Entertainment, Inc. and Subsidiary (the "Company") at March 31, 1999, and
the results of operations and cash flows for the quarters ended March 31, 1999
and 1998. The Notes to the Consolidated Financial Statements which are contained
in the 1998 Form 10-KSB should be read in conjunction with these Condensed,
Consolidated Financial Statements.
Note B: Related party transactions
- ----------------------------------
During the quarter ended March 31, 1999, the Company paid off shareholders,
which had previously made bridge loans to the Company, out of the proceeds from
its initial public offering. The total debt paid during the quarter was $150,000
plus related accrued interest.
An officer of the Company contributed his services and provided workspace at no
charge to the Company during the three months ended March 31, 1999. The
transactions are reflected in the accompanying unaudited, condensed,
consolidated financial statements as charges to compensation and rent expense in
the amounts of $3,000 and $1,500, respectively with corresponding credits to
paid-in capital.
Note C: Shareholders' deficit
- -----------------------------
The following table summarizes transactions affecting shareholders' deficit for
the quarter ended March 31, 1999:
<TABLE>
<CAPTION>
Additional Total
Common stock Paid-in Offering Retained Shareholders'
Shares Amount Capital Costs Deficit Deficit
------ ------ ------- ----- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1998 ........... 700,000 $ 700 $ 31,800 $ (25,731) $(204,696) $(197,927)
Sale of common stock, at $2.50 per
share, pursuant to initial public
offering, net of offering costs .... 80,000 80 199,920 (4,707) -- 195,293
Services and rent contributed by
corporate officer .................. -- -- 4,500 -- -- 4,500
Net loss for the quarter ended
March 31, 1999 ..................... -- -- -- -- (18,439) (18,439)
------- --------- --------- --------- --------- ---------
BALANCE, MARCH 31, 1999 780,000 $ 780 $ 236,220 $ (30,438) $(223,135) $ (16,573)
======= ========= ========= ========= ========= =========
6
</TABLE>
<PAGE>
WORLD HOUSE ENTERTAINMENT, INC.
-------------------------------
Notes to Condensed, Consolidated Financial Statements
(Unaudited)
March 31, 1999
Note D: Income taxes
- --------------------
The Company records its income taxes in accordance with Statement of Financial
Accounting Standard No. 109, "Accounting for Income Taxes". The Company incurred
net operating losses during the three months ended March 31, 1999 resulting in a
deferred tax asset, which was fully allowed for, therefore the net benefit and
expense result in $-0- income taxes.
7
<PAGE>
Part I. Item 2.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
---------------------------------------------
WORLD HOUSE ENTERTAINMENT, INC.
-------------------------------
RESULTS OF OPERATIONS
- ---------------------
The Company recorded a net loss of $18,437 for the first quarter of 1999, while
a loss of $20,411 was reported for the first quarter of 1998.
Net sales declined by $1,003 or 21 percent when compared with the year earlier
period because the President of the Company had to take a leave of absence due
to medical reasons.
Total operating expenses increased by only $392 or 2 percent over the year
earlier period.
Interest expense decreased by $3,369 or 83 percent during the three months ended
March 31, 1999 when compared with the same period in 1998 because the Company
extinguished a substantial portion of its debt during the quarter.
FINANCIAL CONDITION
- -------------------
The Company sold 80,000 shares of its common stock during the first quarter of
1999. The shares were sold shortly after the Securities and Exchange Commission
declared its registration statement on Form SB-2 effective. The shares were
priced at $2.50 each. Net proceeds, after deducting costs related to the
offering, were approximately $169,500.
The Company used substantially all of the proceeds from its offering to
extinguish bridge loans totaling $150,000, and related accrued interest.
At March 31, 1999, the Company continues to have negative working capital.
Current assets equaled $2,393 while current liabilities equaled $35,016.
As of March 31, 1999, the Company experienced operating losses and negative cash
flow from operations. In the aggregate, these indicators raise substantial doubt
about the Company's ability to continue as a going concern.
THE OUTLOOK
- -----------
The Company plans to obtain working capital through the issuance of loans to
private individuals and corporations in order to meet its obligations as they
come due. There is no guarantee that the Company will generate positive income
and cash flow from its operations or will it be successful in its attempts to
raise additional capital.
8
<PAGE>
Part II. - Other Information
WORLD HOUSE ENTERTAINMENT, INC.
-------------------------------
OTHER INFORMATION
- -----------------
Items 1 Through 5 - No response required.
Item 6 - Exhibits and reports on Form 8-K.
(a) Exhibits
27* Financial Data Schedule
(b) Reports on Form 8-K - No response required.
9
<PAGE>
SIGNATURES
The financial information furnished herein has not been audited by an
independent accountant; however, in the opinion of management, all adjustments
(only consisting of normal recurring accruals) necessary for a fair presentation
of the results of operations for the three months ended March 31, 1999 have been
included.
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WORLD HOUSE ENTERTAINMENT, INC.
(Registrant)
DATE: May 14, 1999 BY: /s/ Elizabeth Ann Peters
------------ ---------------------------------------------
Elizabeth Ann Peters
President and Principal Executive Officer
10
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE WORLD
HOUSE ENTERTAINMENT, INC. UNAUDITED BALANCE SHEET AS OF MARCH 31, 1999 AND THE
RELATED STATEMENT OF INCOME FOR THE THREE MONTHS THEN ENDED AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 1943
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2393
<PP&E> 27154
<DEPRECIATION> (11104)
<TOTAL-ASSETS> 18443
<CURRENT-LIABILITIES> 35016
<BONDS> 0
0
0
<COMMON> 780
<OTHER-SE> (17353)
<TOTAL-LIABILITY-AND-EQUITY> 18443
<SALES> 0
<TOTAL-REVENUES> 3847
<CGS> 0
<TOTAL-COSTS> 24073
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 713
<INCOME-PRETAX> (18439)
<INCOME-TAX> 0
<INCOME-CONTINUING> (18439)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (18439)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> 0
</TABLE>
