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 the quarter ended June 30, 1999 Commission file number 000-25415
Twin Faces East Entertainment Corporation
(Exact name of registrant as specified in its charter)
Nevada 22-3374562
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1850 E. Flamingo Rd. Suite 111-A
Las Vegas, Nevada 89015
(Address of principal executive offices) (Zip Code)
(702) 866-5858
Registrant's telephone number, including area code
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes No X
As of June 30, 1999, there were 3,544,349 shares of common stock
outstanding.
<PAGE>
INDEX
PART I - FINANCIAL INFORMATION Page No.
Item 1. Financial Statements
Balance Sheet as of June 30, 1999 3
Income Statement for the three months
ending June 30, 1999 4
Income Statement for the six months
ending June 30, 1999 5
Statement of Cash Flow for the six months
ending June 30, 1999 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operation 7-8
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 9
Item 2. Changes in Securities 9
Item 3. Defaults by the Company upon its
Senior Securities 9
Item 4. Submission of Matter to a Vote of
Security Holders 9
Item 5. Other Information 9
Item 6. Exhibits and Reports of Form 8-K 9
SIGNATURES 10
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
ASSETS
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Current Assets
Regular Checking Accounts $ 49.35
--------------
Total Current Assets 49.35
--------------
Property and Equipment
Equipment 1,028.87
--------------
Total Property and Equipment 1,028.87
--------------
Other Assets 0.00
--------------
Total Assets $1,078.22
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<TABLE>
LIABILITIES AND CAPITAL
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Current Liabilities
Accrued Salary $ 230,600.00
Accrued Expenses 20,609.17
Loan Payable - Smolanoff 2,711.72
Loan Payable - Teeple 77,477.19
---------------
Total Current Liabilities 331,398.08
Long-Term Liabilities 0.00
--------------
Total Liabilities 331,398.08
--------------
Capital
Common Stock 3,465.46
Paid-in Capital 144,412.04
Retained Earnings (291,748.91)
Net Income (186,448.45)
--------------
Total Capital (330,319.86)
--------------
Total Liabilities and Capital $ 1,078.22
==============
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INCOME STATMENT
FOR THE THREE MONTHS ENDING JUNE 30, 1999
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Revenues
Finance Charge Income 29.28
-------------
Total Revenues 29.28
-------------
Cost of Sales 0.00
------------
Total Cost of Sales 0.00
-------------
Gross Profit 29.29
------------
Operating Expenses
Selling, General and Administrative 88,270.99
Net Income (Loss) (88,241.71)
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INCOME STATMENT
FOR THE SIX MONTHS ENDING JUNE 30, 1999
<S> <C>
Revenues
Finance Charge Income 99.95
-----------
Total Revenues 99.95
Total Cost of Sales 0.00
----------
Gross Profit 99.95
-----------
Operating Expenses
Selling, General and Administrative 186,548.40
Net Income (Loss) (186,448.45)
============
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<TABLE>
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDING JUNE 30, 1999
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Cash Flows from operating activities
Net Income (Loss) $ (186,448.45)
Adjustments to reconcile net income to net cash
provided by operating activities
Accrued Salary 97,800.00
Accrued Expenses 20,609.17
Loan Payable - Smolanoff 2,711.72
Loan Payable - Teeple 37,729.13
----------------
Total Adjustments 158,850.02
----------------
Net Cash provided by Operations (27,598.43)
----------------
Cash Flows from investing activities Used For
Net cash used in investing 0.00
----------------
Cash Flows from financing activities
Proceeds From
Common Stock 54.40
Paid-in capital 22,015.60
---------------
Net cash used in financing 22,070.00
---------------
Net increase (decrease) in cash $ (5,528.43)
===============
Summary
Cash Balance at End of Period $ 49.35
Cash Balance at Beginning of Period (920.32)
---------------
Net Increase (Decrease) in cash $ (870.97)
===============
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<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The following discussion and analysis should be read in conjunction with
the Company's financial statements and the notes thereto contained
elsewhere in this filing.
Overview
The Company, TWIN FACES EAST ENTERTAINMENT CORPORATION, a Nevada
corporation (the "Company") is a development stage company formed in 1997.
The purpose of the company's activities is the commercial development of
its entertainment and educational properties. The Company products
essentially lie within 2 areas: 1- Feature film and television live and
animated film scripts awaiting funding to enter production; and 2-
Documentary quality film of Dr. Albert Einstein. The Company was
incorporated under the laws of the State of Delaware on December 5, 1997
and reincorporated under the laws of the State of Nevada on June 17, 1998.
The Company has implemented a dual commercialization strategy for its
products. The first element of this strategy entails the development of its
pages from a Rabbit Journal TV series for children. The second part of the
Company's strategy involves the implementation of the company's characters
for sale as a licensing vehicle for use in other markets. A kid's
prosthetic company has been licensed a logo for embedding in prosthetics
for kids.
The Company has ownership of extensive film footage of Einstein, which
has not been viewed by the public to date. The company has received
numerous requests for development of the footage into books, a documentary,
photo exhibits, and similar entertainment venues.
Results of Operations for the three months ended June 30, 1999
Total operating expenses from continuing operations were $88,271 for
the three months ended June 30, 1999, as compared to the operating expenses
of $98,277 for the three months ended March 31, 1999. Utilizing an
average daily calculation of operating expenses of $970.01 for the period
ending June 30, 1999, and an average daily calculation of operating
expenses of $1,091.19 for the period ending March 31, 1999, this
represented a 11% decrease in average daily operating expenses.
The decrease in expenses was primarily the result of the Company
decreasing expenses in legal and professional expenses during the period
ending June 30, 1999.
Results of Operations for the six months ended June 30, 1999
Total operating expenses from continuing operations were $186,549 for
the six months ended June 30, 1999, as compared to the operating expenses
of $291,794 for the period of December 5, 1997 through December 31, 1998
its year end. Utilizing an average daily calculation of operating
expenses of $1,158.69 for the period ending June 30, 1999, and an average
daily calculation of operating expenses of $746.11 for the period ending
December 31, 1998, this represented a 55% increase in average daily
operating expenses.
<PAGE>
Forward-Looking Statements and Associated Risks
This Quarterly Report on Form 10-QSB contains forward-looking
statements made pursuant to the safe harbor provisions of the Securities
Litigation Reform Act of 1995. These forward looking statements are based
largely on the Company's expectations and are subject to a number of risks
and uncertainties, many of which are beyond the Company's control,
including, but not limited to, economic, competitive and other factors
affecting the Company's operations, markets, products and services,
expansion strategies and other factors discussed elsewhere in this report
and the documents filed by the Company with the Securities and Exchange
Commission. Actual results could differ materially from these forward-
looking statements. In light of these risks and uncertainties, there can
be no assurance that the forward-looking information contained in this
report will in fact prove accurate. The Company does not undertake any
obligation to revise these forward-looking statements to reflect future
events or circumstances.
Liquidity and Capital Reserves
As of June 30, 1999 (Unaudited)
As of June 30, 1999, the Company's assets were $1,078 and its
liabilities were $331,398, resulting in an deficit of assets of ($330,320).
Cash was $49.35 at June 30, 1999 as compared to cash of $4,455 on March 31,
1999, a decrease of $1,113. This represented a 99% decrease in available
cash. This decrease was primarily the result of an increase in operating
expenses.
The Company has continued to fund its deficit cash flow from private
placements of the Company's common stock. It is anticipated that loans and
the sale of the Company's stock will continue until such time as the
Company generates sufficient revenues from its operations to cover
operating expenses.
Year 2000 Issues
Certain of the Company's computer systems and software may interpret
the year 2000 as some other date. The operating system generally employed
by the Company is Windows 95, which is year 2000 compliant. The networking,
general ledger and accounts payable and facility point-of-sale and software
programs require software updates or modifications to address the year 2000
problem. The Company is further addressing the matter by replacing certain
older computers and installing off-the-shelf and other third-party software
that is year 2000 compliant, at an estimated cost of less than $1,000. The
Company anticipates that installation of year 2000 compliant software and
hardware will be completed by the end of 1999. The Company does not believe
that the year 2000 problem will have a material affect on the Company's
operations, however, no assurance can be given that the software updates
and new computers will resolve the problem as scheduled or at all.
<PAGE>
PART II--OTHER INFORMATION
Item 1. Legal Proceedings.
On August 2, 1999, a lawsuit was filed in the United States District
Court for the Southern District of New York, ReadSpeak, Inc. vs Twin Faces
East Entertainment Corp., case No. 99 Civil 8606. The claim in the action
pertains to a violation by Twin Faces of the Lanham Act, unfair competition
and infringement of patent rights. Although the Company consented to the
issuance of a temporary restraining order wherein the Company agrees not to
promote ReadSpeak until further order of the court, the Company has not
conceded to the validity of the claim and intends to assert a counter
claim, contesting the claim of intellectual property rights as asserted by
ReadSpeak, Inc.
Item 2. Changes in Securities.
None.
Item 3. Defaults by the Company upon its Senior Securities.
None.
Item 4. Submission of Matter to a Vote of Security Holders.
None
Item 5. Other Information.
None
Item 6. Exhibits and Reports of Form 8--K.
8-K filed June 30, 1999
8-K filed July 29, 1999
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
TWIN FACES EAST ENTERTAINMENT CORPORATION
(Registrant)
By:/s/ Michael Smolanoff By:/s/ Stan Teeple
Michael Smolanoff Stan Teeple
CEO, President Secretary/ Treasurer
Date: August 14, 1999 Date: August 14, 1999
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